The Sunnier Side of Paul Krugman

While I don’t disagree with the contention that Democrats were skeptical of the Bush administration and had right to be after years of “betrayal” something is missing here. If we ignore both sides we are running the risk of ending up in the exact same place we are now. Democrats seem to have suddenly forgotten that for a decade Republicans have been warning about Freddie & Fannie and calling for oversight, reform and limiting their growth.

On the record are countless Republican Senators & Representatives, not to mention John Snow of the Bush admin and Alan Greenspan who continually warned the two entities were growing out of control and urged oversight. The answer of Barney Frank & other Dems? Republicans were using “fear” tactics, were guilty of racism and Fannie & Freddie needed to grow and adopt more risk to achieve the goal of growing minority and female ownership of homes regardless of risk.

Continually in testimony, they point to the ability of those who were high risk, paying of their mortgages and growing their wealth. This was achieved by the booming economy that created jobs and by selling these homes for more than they were worth. Surprise, considering there was a housing boom and a new revolution in the computer industry. Bubble bursts, 9/11 causes massive new government spending, bad economic decisions made, here we are. They seemed to expect in this testimony, the growth would never end, they ignored the potential for disaster because their ideological objectives were being met.

In short, Democrats are as guilty as Republicans for getting us into this mess. Democrats let Fannie & Freddie balloon and despite a few years of pledging they would prevent grabbing predatory loans, they helped create more opportunities for abuse.

Republicans allowed the private sector abuse these institutions, they let them run without necessary oversight and continued to argue against regulation, even when it was clearly evident that this would all fail.

Together they created a perfect storm. Now neither wants to admit fault and are all too ready to pass the buck onto everyone else. We are facing the passing of a massive government bailout that the Administration was pushing under the cloak of fear in the dead of night, not unlike the Patriot Act & the Iraq War and I don’t have any reason to believe either side has enough self awareness to solve their half of the equation.