The book also points blame at players in private industry. But when I asked what surprised her most from her research, Morgenson, who is no novice to these issues (having covered them for years for both Forbes and the New York Times), simply answered: “How much government involvement there was in the process.”
Even pros like Morgenson could be confused because Congress has worked overtime to muddle the facts, mostly to point fingers at banks and mortgage companies. But when I asked Morgenson who was most liable for this mess, she replied that the offenders were, in fact, Congress, adding that while there was bipartisan responsibility, the principal blame fell on the Democrats. They wanted to expand home ownership to certain minority communities without considering the related risk, and it was Democrats such as Barney Frank and Christopher Dodd who were primarily responsible for stopping efforts to control Johnson and his cohorts. Private industry may have been greedy, but they were merely following the dictates of Congress to expand home ownership.
Mr. Frank, who seems to have been owned and operated by Fannie Mae, was one of the chief protectors of the GSEs. When asked in 2005 about the potential downside to giving loans to people financially ill-prepared to repay them, the cantankerous Mr. Frank answered: “We’ll deal with that problem if it happens.” Congresswoman Maxine Waters, his fellow Democrat, was another one willing to risk public funds based on ill-conceived schemes. Ms. Waters came to the conclusion that someone who made monthly rent payments could just as easily afford a house, so she pushed for even more ridiculous no-money-down loans. Waters seemed to overlook all the additional costs related to home ownership, such as repairs, insurance, and property taxes.
Before you buy into the need to control the banks that were – according to the litany of the Left – so ungrateful for being bailed out, pick up Reckless Endangerment to gain clarity on who dug the hole out of which we’re still climbing today. Then buy a copy for one of the Wall Street protesters; maybe they’ll learn that if they really want to protest this mess, they’ll have to hop onto an Amtrak train and march on Washington.