Pressured to Take More Risk, Fannie Hit a Tipping Point - Series - NYTimes.com
This piece makes it clear that pressure from Congress on Fannie Mae, by Congressman Barney Frank in particular (Why is Senator Chris Dodd not mentioned??), but others too, including both Clinton and Bush administration officials, in no small measure led to the sub-prime mortgage debacle.
There is much blame to go go around and many bad decisions now being identified that led to this mess. Nevertheless, the worst may not be over.
As many have said, this won't unwind until housing prices, particularly in the 'bubble' areas of the Sunbelt like Nevada, Florida, Arizona and California, fall to reasonable levels. Trillions of dollars in real estate 'bubble' value will be lost, but millions of people made lots of money in this mess, too.
Politicians like Dodd and Frank should be tossed out on their ears for fostering this debacle.
And, oh yes, why has Alan Greenspan and his cohorts who were sponsoring the easy credit climate a decade ago been spared criticism?
There are books to be written about this mess, but one theme that underlies all all of it is out-of-control federal spending. This leads to the 'OKness' of an American debt culture all fostered by the drive for economic growth which is the only way the debt, both private and government, can be serviced. In all likelihood, the perpetual growth cycle cannot be sustained. And as it turns seriously negative, our dire financial mess will be worse, I fear.
McCain's call for a government spending freeze is a move in the right direction. I fear Obama promises no real solutions.
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