Arranology

Greenspan and Crow Pie

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In this case, I hate to say I told you so but I did and I’m not the only one. Rob at Fact-esque points to an FDL post that harkens back to a GAO report that laid it all out 14 years ago when the derivatives market was invented. Under Clinton. Who also had little interest in regulating the financial sector that provided him mucho campaign dinero. Despite the heavyweights who are denying all knowledge that anything was amiss.

Alan Greenspan was forced to admit he had “put too much faith” in the power of an unrestricted market, which is a bit like a Japanese filmmaker saying he put too much faith in Godzilla. “Too Much” belief in a cartoon of the real world is not exactly a forgivable, legitimate reason for allowing the planetary economy to self-destruct because, after all, your rich friends got a whole lot richer for a while there for as long as they could maintain the myth. “Sorry, I didn’t realize stomping on your head with hobnail boots was going to crunch your skull” a) doesn’t do me much good when I’m dead and b) isn’t credible since everyone who has ever seen a boot or a skull and isn’t a MORON would be able to tell what would be likely to happen when they met.

Does Alan actually expect me to believe he didn’t know this? Because I don’t and I doubt anyone else does. I was writing what was going to happen two years ago and I ain’t no Alan.

“Those of us who have looked to the self-interest of lending institutions to protect shareholders’ equity, myself included, are in a state of shocked disbelief,” he told the House Committee on Oversight and Government Reform.

I don’t think so. I guess Alan would rather appear STUPID than admit he was helping his rich buddies at our expense. Meanwhile, the folks in charge of W’s “legacy” have begun to think Bush ought to (pretend to) do something about the plight of ordinary schmoes now that the Treasury – and far more – has been emptied into the pockets of Lehman Bros et al.

With foreclosures mounting, Bush administration officials said Thursday that they were preparing to step up efforts to help struggling homeowners.

Oh yeah? Well, better late than never. But how?

A senior policy maker told a Senate committee that the administration was working on a plan under which the government would offer to shoulder some of the losses on loans that are modified.

The insurance program could cost tens of billions of dollars, according to a person briefed on discussions about the plan, and would be run by the Treasury Department under the $700 billion financial rescue bill Congress passed earlier this month.

The remarks about the plan, made by Sheila C. Bair, the chairwoman of the Federal Deposit Insurance Corporation, came as a new report showed that foreclosure filings jumped 71 percent in the third quarter from a year earlier. At the hearing, Congressional Democrats criticized the administration for not doing enough to help homeowners even as the Treasury and Federal Reserve have moved to inject hundreds of billions of dollars into banks and the financial system.

A criticism that might have more force coming from a group that had NOT been right in the middle of the shouting, demanding the same bail-out and then been the ones to appropriate the f&^%$g money.

A for Effort, ZERO for Accuracy.

Oh and btw? Greenspan also had to admit (tough day for him and conservatives generally) that contrary to Wingnuttia’s ardent mythology, the FM’s (Fannie Mae and Freddie Mac) did NOT – repeat NOT – cause the mortgage meltdown.

Oops.

Federal housing data back up this conclusion — that “the private sector, not the government or government-backed companies, was behind the soaring subprime lending at the core of the crisis.” As Center for American Progress Senior Fellows Michael S. Barr and Gene Sperling explain, Freddie and Fannie weren’t even securitizing subprime mortgages en-masse until 2005:

The subprime boom was led by investment banks and mortgage brokers, not by government-sponsored enterprises. Fannie and Freddie became unhinged in the middle of this decade when they tried to play catch-up. Their shareholders and managers pushed them to recover the securitization market share they had lost to unregulated investment banks getting absurd AAA ratings for packaging subprime dross. From 2005 to 2008, Fannie Mae purchased or guaranteed $270 billion in loans to risky borrowers — triple the amount in all its earlier years combined.

As Center for Economic and Policy Research co-director Dean Baker has written, “Fannie and Freddie got into subprime junk and helped fuel the housing bubble, but they were trailing the irrational exuberance of the private sector.

But hey, conservatives never allow facts to disrupt one of their favorite myths so even if this is Alan “God” Greenspan owning up[ to a goof, that isn’t going to stop them. Look for Sarah to attack the poor as the cause of the downfall and St John to describe how shocked and surprised he was when it all went down the corporate tubes.

Yeah. Him and Claude Rains.

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Written by Mick

October 24, 2008 at 12:57 pm

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