Rubio's other 'slip'
Dominic Preziosi February 14, 2013 - 11:44am
In fact, a major cause of our recent downturn was a housing crisis created by reckless government policies.
Youd think that by 2013 Republicans might have abandoned the long discredited position that Fannie and Freddie or some ill-conceived big-government solution was the root cause of the mortgage crisis, or that the partys anointed savior might more carefully consider the use of such disingenuous rhetoric. Paul Krugman is only among the latest to set things straight:
Look, this is one of the most thoroughly researched topics out there, and every piece of the government-did-it thesis has been refuted. No, the [Community Reinvestment Act] wasnt responsible for the epidemic of bad lending; no, Fannie and Freddie didnt cause the housing bubble; no, the high-risk loans of the [government sponsored enterprises] werent remotely as risky as subprime.
How long ago was this contention already being shot down? Rubios remark had me returning immediately to a faithfully referenced story, bookmarked years ago mainly to prepare for a family gathering at which several excited peddlers of the tale would be in attendance: Private Sector Loans, Not Fannie or Freddie, Triggered Crisis. Its from October 2008, but unlike the myth dutifully propounded by Rubio, it never really gets old, while also having the benefit of being true.Its important to keep these facts in evidence, because, as Krugman concludes:
[Rubio] and his party are now committed to the belief that their pre-crisis doctrine was perfect, that there are no lessons from the worst financial crisis in three generations except that we should have even less regulation. And given another shot at power, theyll test that thesis by giving the bankers a chance to do it all over again.
About the Author
Dominic Preziosi is Commonweal’s digital editor.