So, who should go to jail?
John McCain insists that the financial crisis is the direct result of Wall
Street's "unbridled corruption and greed." Sarah Palin says likewise.
Senator Obama, for the most part, has merely echoed what Treasury Secretary
Henry Paulson has already said. Obama has an excuse though: He hasn't
finished conducting his seminar on what's going on; he'll get back to us
after a rousing multivariate analysis of the value of "decisiveness." Joe
Biden says the Wall Street crisis is the result of George W. Bush's tax
cuts, which makes as much sense as blaming the rising price of fairy dust.
But as a wise man once asked, Who gives a rat's patoot what Joe Biden
thinks?
Nonetheless, blame is settling on those old standby scapegoats, Wall Street
fat cats.
So, I ask again: Who should go to jail? And the answer, as far as I can
tell, is: no one - at least no one on Wall Street. That may turn out to be
wrong. But even if there's a bad penny or two in the pile, nobody will say
this CEO or that banker is responsible for the mess. And so far, despite a
flood of coverage and speeches and finger-pointing, nobody's aimed their
bony finger of condemnation at any Wall Street fat cat who did anything
criminal.
Criminal stupidity is another issue entirely. But the beautiful thing about
our economic system is that bad decisions are punished in the marketplace.
The starting line for the parade of falling dominoes doesn't begin on Wall
Street. Nor, alas, will the parade end there. But if you want to know where
it really begins, look to the Capitol steps.
The self-proclaimed angels in Washington will tell you they've been working
tirelessly to expand the American dream of homeownership by making mortgages
available to people unable to plunk down 20 percent on a house. Franklin
Raines, the Clinton-appointed former head of Fannie Mae from 1998 to 2004,
made it his top priority to make mortgages easier to get for people with
poor credit, few assets and little money for a down payment.
The Clinton administration, meanwhile, reinterpreted the Jimmy Carter-era
Community Reinvestment Act to politicize lending practices. Under the CRA,
the government forced banks to prove they weren't "redlining" - i.e.,
discriminating against minorities - by approving loans to minorities and
various left-wing "community group" shakedown artists whether they were bad
risks or not. (A young Barack Obama got his start with exactly these sorts
of groups.) Sen. Phil Gramm called it a vast extortion scheme against
America's banks. Still, the banks were perfectly happy to pass the risky
loans to Raines' Fannie Mae, which was happy to buy them up.