Friday, October 10, 2008

Simplistically Unsound...

A friend, who happens (alas) to be a Republican, was bemoaning the fact she lost quite a bit of money because the all the stock market economic turmoil. I sympathize. It sucks for her, and everyone else who has lost savings as well. I gave her a very simple solution: STOP VOTING REPUBLICAN.

Well, she gave me an answer: It was BILL CLINTON who pressured Fannie and Freddie to offer loans to people who couldn't afford it. Therefore, it's HIS fault all this is going on now. Ah hah. Ok.

It's amazing how simplistic and misleading this statement is. I did a bit of research, not much, but enough. In truth, Clinton DID pressure Fannie and Freddie. But he didn't force them. They could have come back with an answer showing how offering such loans would not benefit anyone in the long run. And since Clinton was pressuring at the end of his SECOND term, back in 1999, he probably would have backed off.

Instead Fannie and Freddie (and everyone else who followed) DID offer loans to the credit unworthy, and did so until VERY recently. To further exacerbate the problem, they offered ARM loans. These are horrible loans (the worst out there) in which the buyer makes interest-only payments for the first five to seven years. After the initial term, the rate shoots up, sky-high. The result: Tens of thousands (hundreds of thousands?) of people lost their homes. More are losing every day.

Here was my response to my Republican (alas, again) friend: You know that's an EXTREMELY simplistic answer, right? The administration "pressured." That's a little different than forced or put into law. Honestly, Fannie and Freddie did not HAVE to cave in to pressure. Plus, there were a LOT of other factors involved. Link: Subprime mortgage crisis - Wikipedia, the free encyclopedia

Mostly, it was basic human greed and the lack of any government regulation, a result, mostly, of a Republican Congress that HATED regulation (also kind of simplistic, but also more REALISTIC). Link: Causes of Subprime Crisis | Mortgage Home Loans - Info Center
So, no. It's NOT Clinton's fault.

One final point. Even if it HAD BEEN Clinton's fault, which it wasn't, so, like, um, WHERE WAS THE WONDERFUL REPUBLICAN GOVERNMENT FOR THE LAST NINE YEARS TO TRY AND REVERSE/AVERT THIS SCENARIO?! You know where it was? It was DEREGULATING... And not AT ALL interested in averting this crisis. And you can't blame the current, marginally Democratic Congress because the Republicans have NOT allowed their colleagues across the aisle to pass any useful bills, threatening to filibuster every time the Democrats tried!

So, again, sorry, Republican friend, but you can't blame Clinton for this. That's just simplistically unsound.

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