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09/23 Morning Report

Our two Presidential candidates are out and about casting blame for the financial meltdown—and both proclaiming the bailout necessary. No surprise that Obama is blaming Republican policies. McCain blames human greed. I tend to agree with McCain. Let’s face it…all these companies that signed massive contracts with CEOs without requiring performance guarantees is insane. That is not the fault of government. That is simple human greed and stupidity.

But, there was an article Monday over at CNSNews that startled me. The article relies quotes Sheldon Richman, editor of The Freeman and an economist with the Foundation for Economic Education, who believes that government intervention is to blame for our problems. Among other things, Richman said:

…government policy laid the foundation of this crisis more than 30 years ago when Congress passed the Community Reinvestment Act of 1977. This law forced banks to loan money to low-income borrowers as a way to ensure that financial institutions would “meet the credit needs of the local community.”

Under the Clinton administration, federal regulators began using the act to combat “red-lining,” a practice by which banks loaned money to some communities but not to others, based on economic status. “No loan is exempt, no bank is immune,” warned then-Attorney General Janet Reno. “For those who thumb their nose at us, I promise vigorous enforcement.”

The Clinton-Reno threat of “vigorous enforcement” pushed banks to make the now infamous loans that many blame for the current meltdown, Richman said. “Banks, in order to not get in trouble with the regulators, had to make loans to people who shouldn’t have been getting mortgage loans.”

And that is definitely food for thought. That is definitely information you won’t hear shared by the mainstream media, or Barak Obama. And, what you won’t hear either candidate doing is making the same conclusion that Richman reaches:

What this financial crisis really shows, Richman said, is that politicians “don’t know what they’re doing. They don’t understand economics. They think there are no laws of economics, that they can decree whatever they want and that there won’t be consequences.”

(…it’s an interesting article. go read it, and check his claims, too…)


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