Regulations Cause Credit Crunch: O’Malley Calls for More Regulations
Some of you may have seen Governor O’Malley on WBAL TV last night offering his “analysis” of the current financial crisis. WBALTV.com does not have the video posted so I can’t give you his exact words, but it was his usual progressive schtick. O’Malley laid the blame on a lack of government regulation and despicable puppy-killing conservatives.
Okay I made the second part up, but David Paulson, excuse me, Oscar Mayer makes things up from whole cloth—and believes them—so why can’t I?
To say that O’Malley’s “analysis” is severely flawed would be an understatement. It lacks grounding in fact and reality.
Lack of government regulation? Indeed, it was government regulation that caused the credit crunch, more precisely regulations altered by O’Malley’s own political benefactor, Bill Clinton.
The Clinton administration played identity politics with credit standards. With threats of accusations of redlining, from the Clinton administration and allies like ACORN, they forced banks to loosen their lending policies and approve subprime mortgages to people, who could not afford to repay the loans (ACORN got a lot of scratch out of the deal too).
Aside: Loosening lending standards to expand credit to poor minorities not qualified for it… some might call that progressive, but I digress.
Democratic created and protected government sponsored enterprises (GSE) Fannie Mae and Freddie Mac bought billions of dollars in subprime loans. The GSEs then worked with Wall Street to sell the loans to investors as mortgage-backed securities, and you know the rest.
Governor O’Malley, just in case you didn’t read that right the first time, GSE stands for GOVERNMENT sponsored enterprises.
President Bush, O’Malley’s second favorite stand in for all things bad, tried to reform the GSEs, but Democrats blocked that effort. Democrats stood against reform even after Fannie and Freddie executives (Jamie Gorelick, Franklin Raines, and Jim Johnson) overstated earnings by $10.6 billion in order to line their own pockets.
Long story short: progressive regulations flout reality, lead to financial meltdown, Pelosi’s of the world blame free markets, call for more progessive regulation.
Of course, this type of progressive regulation leading to disaster for the taxpayer and the little guy is nothing new. Similar situations played themselves out during the New Deal era. Government agricultural regulators tossed thousands of tenant farmers off their land. Government price regulators harassed and literally threw small businessmen in jail for having the temerity to offer their customers lower prices, see Jacob Maged and the Scheter brothers.
Yes Governor O’Malley keep blaming this situation on a lack of government regulation. Anyone not drinking your Kool-Aid knows you are just shoveling progressive bullshit. To heed your “analysis” would invite more of the same meddling, which got us into this mess in the first place.