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Walter Williams: The Government, Not The Market, Created Our Financial Crisis
IBD ^ | 12/13/2012 | Prof. Walter Williams

Posted on 12/13/2012 7:11:04 AM PST by SeekAndFind

Suppose you saw a building on fire. Would you seek counsel from the arsonist who set it ablaze for advice on how to put it out?

You say, "Williams, you'd have to be a lunatic to do that!" But that's precisely what we've done: turned to the people who created our fiscal crisis to fix it. I have never read a better account of our doing just that than in John Allison's new book, "The Financial Crisis and the Free Market Cure."

Allison is the former CEO of Branch Banking and Trust, the nation's 10th largest bank. He assembles evidence that shows that our financial crisis, followed by the Great Recession, was caused by Congress, the Federal Reserve, Freddie Mac and Fannie Mae, and was helped along by the Bill Clinton, George W. Bush and Barack Obama White Houses.

The Federal Reserve, under the chairmanship of Alan Greenspan, created the massive housing bubble by overexpanding the money supply. President Bush and members of Congress, through the Community Reinvestment Act, intimidated banks and other financial institutions into making home loans to people ineligible for loans under traditional lending criteria. They became subprime lenders.

Lending institutions made these loans, now often demeaned as predator loans, because they knew they'd be sold to government-sponsored enterprises (GSEs) Freddie and Fannie.

The GSEs had no problem taking this risky path, because they knew that Congress would force taxpayers to bail them out. Current Fed Chairman Ben Bernanke is following in the footsteps of his predecessor by massively expanding the money supply by purchasing Treasury debt. He is creating prime conditions for a calamity by the end of this decade.

(Excerpt) Read more at news.investors.com ...


TOPICS: Business/Economy; Culture/Society; Government; News/Current Events
KEYWORDS: financialcrisis; government; markets

1 posted on 12/13/2012 7:11:08 AM PST by SeekAndFind
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To: SeekAndFind

Walt Williams is my fave along with Tom Sowell.


2 posted on 12/13/2012 7:33:03 AM PST by the OlLine Rebel (Common sense is an uncommon virtue./Technological progress cannot be legislated.)
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To: SeekAndFind

A very good explanation of how we got into this mess.


3 posted on 12/13/2012 7:38:37 AM PST by TruthWillWin (The problem with socialism is that you eventually run out of other peoples money.)
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To: SeekAndFind
...and was helped along by the Bill Clinton, George W. Bush and Barack Obama White Houses.

The truth is that the Bush administration repeatedly tried to reign in this madness and was thwarted primarily by Barny Frank and Chriss Dodd. Don't believe me? Look it up. There are even multiple Youtube videos of the hearings for those of you who don't like to read.

4 posted on 12/13/2012 7:38:49 AM PST by SunTzuWu
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To: SunTzuWu

RE: The truth is that the Bush administration repeatedly tried to reign in this madness and was thwarted primarily by Barny Frank and Chriss Dodd.

__________________________________________

Some videos for people who want references (and who still blame Bush for the subprime mess, like most of the Obama voters):

http://www.youtube.com/watch?v=cMnSp4qEXNM

http://www.youtube.com/watch?v=LPSDnGMzIdo

But then, Bush was also willing to play along and he isn’t entirely blameless. See here:

http://www.youtube.com/watch?v=kNqQx7sjoS8


5 posted on 12/13/2012 7:43:19 AM PST by SeekAndFind
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To: SeekAndFind
Quantitative Easing Explained
6 posted on 12/13/2012 7:44:31 AM PST by ArGee (Reality - what a concept.)
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To: the OlLine Rebel
Wouldn't you love to have either one of them in the White House?

I certainly would!


7 posted on 12/13/2012 7:52:33 AM PST by Perseverando (Gun control? It's the OBOTS who are filling up prisons for violent crimes, not the Tea Party.)
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To: SeekAndFind

the gutless Republicans wouldn’t make an issue of this during the ‘08 election.. I tried to talk to Kansas Senator Pat Roberts office about this in ‘08, and heard crickets. This Tuesday I talked to his office about the Lord Monckton/Joe Arpaio Birth Certificate Affidavit. Pat believes 0bama is legal, and anyone who believes otherwise is a conspirator. The rinos are more dangerous than the democrats


8 posted on 12/13/2012 7:54:55 AM PST by stickywillie (God Bless Lord Monckton)
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To: SunTzuWu
he Bush administration repeatedly tried to reign in this madness and was thwarted primarily by...

But Bush was trying to have a war in Iraq which meant giving in to the Democrats on the things that they wanted. It was dumb.

9 posted on 12/13/2012 8:04:20 AM PST by AndyJackson
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To: Perseverando

They are my 1st choices. MUCH rather have either of these 100% American blacks than the half-baked pseudo-black African there now.


10 posted on 12/13/2012 8:36:51 AM PST by the OlLine Rebel (Common sense is an uncommon virtue./Technological progress cannot be legislated.)
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To: SeekAndFind

They did and they have done so on purpose.


11 posted on 12/13/2012 8:38:05 AM PST by freekitty (Give me back my conservative vote; then find me a real conservative to vote for)
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To: SeekAndFind
I'm sorry, but there were plenty of culprits in the private sector as well. AIG. Banks. Ratings agencies. Corporate executives who thought systemic risk was a thing of the past. And millions of homebuyers who failed to educate themselves on the true cost of what they were getting into - and whether they could handle such.

One of the biggest problems with the post-mortems on the financial crisis is that too many people want to limit the blame to one sector, instead of realizing something this screwed up takes many, many culprits at all levels.

12 posted on 12/13/2012 8:40:35 AM PST by dirtboy
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To: SeekAndFind

I’m currently reading Paul Sperry’s “The Great American Bank Robbery.” Sperry puts the lion’s share of the blame on Bill Clinton. While he does not absolve Bush II of some sins, he accuses Clinton of starting the whole mess under the guidelines of the CRA (Community Reinvestment Act). Bush didn’t help by trying to relax some regulations, but he also tried to reform the FMs and was resisted by the Dems. But no CRA, no election of Clinton, and the financial crisis would never have happened. Tom Sowell’s book “The Housing Boom And Bust” mostly arrives at the same conclusions as Sperry. Clinton and his AG Janet Reno the arch-criminals here.


13 posted on 12/13/2012 8:46:14 AM PST by driftless2
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To: SeekAndFind

Bush is not entirely blameless, but he did recognize the problem and tried to reform things. He was rebuffed a number of times in his efforts. Bill Clinton is the arch-villain in the whole sorry mess.


14 posted on 12/13/2012 8:48:17 AM PST by driftless2
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To: dirtboy

Nah, it was their fault, not ours. Simple thinking for simple people. You’re asking for intellectual honesty, good luck with that.


15 posted on 12/13/2012 9:03:45 AM PST by Wolfie
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To: driftless2; dirtboy

They could have shut the door on mortgages, but once the banks started playing with derivatives, it was only a matter of time before they took everybody down with them.


16 posted on 12/13/2012 9:19:01 AM PST by Wolfie
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To: SeekAndFind
As usual, Williams is right on the mark.

William Flax

17 posted on 12/13/2012 9:26:47 AM PST by Ohioan
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To: the OlLine Rebel; Grampa Dave; tubebender; dixiechick2000; AuntB; NormsRevenge; BOBTHENAILER
"Walt Williams is my fave along with Tom Sowell."

I'm with you!!! I certainly prefer these two Phd's/Drs to the two famous/infamous irreverent "Reverends" as "leaders" of the "people of color" in this country!!!

I just crack up when Rush calls the "Black Cawcuss" the "Black Caucasions." I know... I'm sorry... that was just so rayshist to even crack a smile at such a remark...

18 posted on 12/13/2012 11:12:39 AM PST by SierraWasp (Blessed are they who prospect, dig & drill, for they are the primary producers of new, real wealth!!)
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To: SeekAndFind

There’s another book that also documents this discussion almost perfectly called “Reckless Endangerment!” It’s never ever gotten enough press or promotion or perusal by enough people!!!


19 posted on 12/13/2012 11:16:15 AM PST by SierraWasp (Blessed are they who prospect, dig & drill, for they are the primary producers of new, real wealth!!)
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To: SunTzuWu

Don’t forget to mention Maxine Waters with her new up-lifted face defending Raines at FANMA (Fannie Mae) to the hilt, as well as Dodd and Fwank.


20 posted on 12/13/2012 11:21:33 AM PST by SierraWasp (Blessed are they who prospect, dig & drill, for they are the primary producers of new, real wealth!!)
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To: Wolfie

Yes, but the fact remains all the funny business was started in the Clinton admin. No Clinton admin forcing banks to take on bad loans which resulted in shaky derivatives and securties, and no eventual financial crisis. Read Sperry’s book. Clinton is the arch-criminal mastermind in the whole thing.


21 posted on 12/13/2012 11:33:54 AM PST by driftless2
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To: driftless2; dirtboy

The derivatives market is still alive and well, even after the problems with them were exposed. And yeah, sub-prime mortgages were a bad idea. But it took the financial geniuses of Wall Street to turn firecrackers into atom bombs.


22 posted on 12/14/2012 4:18:19 AM PST by Wolfie
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To: Wolfie

The fact remains, no matter how many crooks on Wall Street, none of it would have happened if the Clinton admin hadn’t got the ball rolling.


23 posted on 12/14/2012 4:23:14 AM PST by driftless2
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To: driftless2

It wouldn’t have happened with sub-prime mortgages, but it would have happened with derivatives based on something else.
If the derivatives market crashes again, we’re well and truly screwed. And it has nothing to do with housing.

http://www.freerepublic.com/focus/f-news/2965885/posts


24 posted on 12/14/2012 4:28:51 AM PST by Wolfie
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To: driftless2

We bought our 2nd house in the middle of the Clinton era, and looking back on it, there were warning signs of what was to come with the ease with which we got that mortgage, as compared to our first house in the mid-80s. We were flabbergasted that they almost would have made the loan on the 2nd house on my income alone; we would have never considered it. Unfortunately much of the U.S., including all of Washington DC, isn’t as financially prudent as we are.


25 posted on 12/14/2012 4:52:43 AM PST by FreedomPoster (Islam delenda est)
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To: Wolfie

You’re wrong... read Sperry’s book, “The Great American Bank Robbery.”


26 posted on 12/14/2012 11:31:08 AM PST by driftless2
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