Seriously, Did That Guy Get Anything Right?
In our annual Christmas letter (I know), which went out yesterday (apologies), I wrote the following: "We gave up trying to sell Patricia’s condo in May but once we did it rented like that to a very nice woman — one of 30 people who desperately wanted it. Apparently it’s a renting market. As opposed to an ownership society. Seriously, did that guy get anything right?"
Even as I wrote it I began to wonder about that old Bush line, another catchphrase gone horribly awry, and why no one had done an in-depth piece on specifics of the Bush administration's culpability in our current housing — and thus economic — crisis.
The New York Times to the rescue. In today's paper, Jo Becker, Sheryl Gay Stolberg and Stephen Labaton have a great in-depth piece on the political push for an ownership society that led to our current renting market. It's easy to see in hindsight. Basically the administration was pushing for more ownership and less regulation at a time when housing prices were soaring and salaries were flatlining. How to fit more people into more expensive homes at a time when they had less real money and fewer people were watching? Yeah:
So Mr. Bush had to, in his words, “use the mighty muscle of the federal government” to meet his goal. He proposed affordable housing tax incentives. He insisted that Fannie Mae and Freddie Mac meet ambitious new goals for low-income lending.
Concerned that down payments were a barrier, Mr. Bush persuaded Congress to spend up to $200 million a year to help first-time buyers with down payments and closing costs.
And he pushed to allow first-time buyers to qualify for federally insured mortgages with no money down. Republican Congressional leaders and some housing advocates balked, arguing that homeowners with no stake in their investments would be more prone to walk away, as Mr. West did. Many economic experts, including some in the White House, now share that view.
This administration made decisions that allowed the free market to operate as a barroom brawl instead of a prize fight,” said L. William Seidman, who advised Republican presidents and led the savings and loan bailout in the 1990s. “To make the market work well, you have to have a lot of rules.”
But Mr. Bush populated the financial system’s alphabet soup of oversight agencies with people who, like him, wanted fewer rules, not more.
It gets worse. One of the top 10 donors to the Republican party in 2004, Roland Arnall, founded Ameriquest, one of the largest lenders in the subprime market. In 2005, White House aides discussed Ameriquest's troubles — including setting aside $325 million to settle with 30 states which claimed Ameriquest preyed on borrowers — but not in terms of the economy. They discussed Ameriquest because Pres. Bush had just nominated Arnall to be ambassador to the Netherlands.
Gov. Blagojovitch looks like a piker in comparison.
Read the entire article. It's worth it. Conservatives accuse liberals of being naive about the poor — that the poor are poor because they deserve it — and so helping them is pointless. But conservatives are just as naive, if not moreso, about the rich. They think the rich are rich because they deserve it — because they're talented, not because they're, say, predatory or ruthless — and so regulating them is unnecessary and just gets in the way of their talent.