Who Got UsTo Where We Are, And How

The American Spectator has a good article in the February issue that walks you through the beginnings of the mortgage market crisis that has contributed so heavily to the floundering economy. Here's the intro, but take five or ten minutes and read the whole thing:

Two narratives seem to be forming to describe the underlying causesof the financial crisis. One, as outlined in a New York Times front-page story on Sunday, December 21, is that President Bush excessively promoted growth in home ownership without sufficiently regulating the banks and other mortgage lenders that made the bad loans. The result was a banking system suffused with junk mortgages, the continuing losses on which are dragging down the banks and the economy. The other narrative is that government policy over many years--particularly the use of the Community Reinvestment Act and Fannie Mae and Freddie Mac to distort the housing credit system-- underlies the current crisis. The stakes in the competing narratives are high. The diagnosis determines the prescription. If the Times diagnosis prevails, the prescription is more regulation of the financial system; if instead government policy is to blame, the prescription is to terminate those government policies that distort mortgage lending.

If you find that kind of stuff interesting, also check out this article and timeline from Public Opinion Online, some comments on that article from The Virginian. And remember as you read that Connecticut's senior senator, Chris Dodd, made sizeable contributions to the"success" of the CRA, the lack of appropriate regulation in the industry, and ultimately the collapse of our economy.