Here’s my letter published in the Oct. 25th edition of the Boston Globe responding to an editorial advocating the creation of a Consumer Financial Protection Agency:

Your editorial, “To Fix Financial System, Protect Consumers First”, claims that a Consumer Financial Protection Agency will prevent a “recurrence” of the “financial pathology” that caused the banking crisis. But the source of that “financial pathology” was bad government policy, and your editorial calls for more of it.

Government subsidized toxic mortgages through entities like Fannie Mae and mandated…

Read the full story

The mortgage meltdown was caused partly by the government, which created an artificial market for bad mortgages.  The Washington Examiner cites a recent study by Peter Wallison, who had prophetically warned about risky financial practices for years, finding that two-thirds of all bad mortgages were either “bought by government agencies or required to be bought by private companies under government pressure.” Now, the Federal Housing Administration is ramping up its purchases of low-quality mortgage loans, threatening taxpayers with hundreds of billions of dollars…

Read the full story

George Mason University Professor Ilya Somin explains how the Obama administration is expanding the awful policies that caused the mortgage crisis, like having taxpayers effectively underwrite risky-mortgage loans by bailing out GSEs at a cost of hundreds of billions of dollars.  Now, the administration is stepping up Federal Housing Administration subsidies for risky, junky mortgage loans that are likely to default in large numbers.

(The Obama administration doesn’t seem to have learned history’s lessons overseas, either.  White House Communications Director Anita Dunn cites as…

Read the full story

ACORN is now suing the whistleblowers who allegedly filmed it promoting illegal sexual activities for $2 million! And not just them, but also the conservative web site that made the video public! ACORN seeks an injunction to silence them — a classic example of an unconstitutional prior restraint.

That’s a flagrant violation of the First Amendment, but the lawsuit was filed in state court in Baltimore, where the judges are very liberal, so who knows if ACORN’s lawsuit will be dismissed. Even if it…

Read the full story

ACORN, which had its housing funds cut-off by Congress over a recent scandal, is now embroiled in a tax-evasion scandal, reports the Washington Times.

ACORN has long received taxpayer money despite a history of financial fraud and voter registration fraud.  ACORN helped spawn the mortgage crisis by promoting “liar loans.”

ACORN is a left-wing group that launched Obama’s career as a community organizer.  He has long-standing ties to ACORN, and an ACORN affiliate received received $800,000 from Obama’s campaign.

ACORN stands to profit greatly from Obama’s financial-regulation proposals, which would strengthen…

Read the full story

Congress recently voted to cut off federal housing funds to controversial group ACORN.  But since most federal money goes to ACORN-related entities and affiliates, not ACORN itself, Congress’s action is expected to have little practical effect. ACORN’s chief defender in Congress, House Banking Committee Barney Frank (D-Mass.), claims that the cut-off is unconstitutional. House Majority Leader Steny Hoyer (D-Md.) suggests that Congress’s action was purely symbolic, and not expected to have any effect on ACORN.

Indeed, ACORN’s empire is likely to expand thanks…

Read the full story

President Obama is now pushing financial regulations that reinforce the worst features of the status quo.  They would actually increase regulatory pressure on lenders to make the risky, low-income loans that helped spawn the financial crisis.  At the same time, they would worsen the credit crunch by shutting down banking operations in retail outlets like Target, known as “industrial loan corporations,” that are convenient for consumers.  Earlier, Obama backed a new law that is wiping out many credit-card rewards programs and rebates, and leading…

Read the full story

Banks will now be pressured to make even more risky, low-income loans. Obama has sent to Congress his proposal to create a politically-correct Consumer Financial Protection Agency. “The agency would be in charge of enforcing the Community Reinvestment Act, a law that prods banks to make loans in low-income communities.”

Government pressure on banks to make low-income loans was a key reason for the mortgage meltdown and the financial crisis. Yet Obama’s disturbing proposal would empower the new agency to enforce the Community Reinvestment…

Read the full story

The mortgage crisis was caused largely by the reckless government-sponsored mortgage giants Fannie Mae and Freddie Mac, and by federal affordable-housing mandates. But Obama’s proposed financial rules overhaul does absolutely nothing about Fannie Mae and Freddie Mac, admits Obama’s Treasury Secretary, tax cheat Timothy Geithner, even though he admits that “Fannie and Freddie were a core part of what went wrong in our system.” Worse, Obama’s plan is “largely the product of extensive conversations” with two lawmakers responsible for the corrupt status quo, Chris Dodd and Barney…

Read the full story

The President has just announced proposals for a major overhaul of the financial system. The proposals would force banks to make even MORE risky loans to low-income people. Even liberal newspapers like the Village Voice have admitted that “affordable housing” mandates are a key reason for the housing crisis and the massive number of defaulting borrowers. But Obama will not accept this reality. Instead, he wants to create a new “Consumer Financial Protection Agency” to rigorously enforce regulations pressuring banks to make loans to low-income…

Read the full story

Ironically, by getting rid of General Motors CEO Rick Wagoner, the Obama Administration has made it even harder for it to demand the painful changes needed to make the company competitive — meaning that the billions of additional dollars the Administration plans to dump on GM will likely be wasted (the way that England’s attempt to bail out its automakers failed, wasting billions). As Mickey Kaus notes,

“After visibly defenestrating GM CEO Rick Wagoner, and moving to replace the board of directors, won’t Obama…

Read the full story

As economists and the Wall Street Journal have noted, the Community Reinvestment Act was an important ingredient of the financial crisis, by pressuring banks to make risky loans to people in low-income, predominantly-minority neighborhoods, even if such loans were unlikely to be repaid. Now those loans, which were economically unjustifiable, are defaulting, resulting in pain for both banks and borrowers alike.

So what does the New York Times recommend as a solution? To “strengthen” and expand the Community Reinvestment Act’s provisions…

Read the full story

Banks get sued for discrimination no matter what they do.  If they don’t make enough loans in low-income, predominantly minority neighborhoods, they get accused of “redlining,” and are subject to sanctions under politically-correct laws like the Community Reinvestment Act, which contributed to the financial crisis by pressuring lenders to make risky mortgage loans. 

But if they do make such loans, they get accused of “reverse redlining,” and get sued by the liberal special-interest groups and municipalities that encouraged them to make such loans during the mortgage bubble.  Baltimore and various…

Read the full story

The bailout bill that passed through Congress today seeks to solve the financial mess by massively increasing government involvement in private finance. But more Government cannot be the answer to a government-created problem. The fact is that short-sighted government policies distorted the market in the first place. Bankers were certainly to blame for responding to these signals from government in the hope of a quick buck, but at its base, much of the problem was caused by government.

These are the…

Read the full story

Banking expert Peter Wallison explains why deregulation didn’t cause the financial crisis, while Steven Malanga explains how government regulators foolishly pressured banks to drop prudent lending criteria as “discriminatory,” resulting in risky lending that caused the crisis. 

Peter Wallison was one of the few people who warned for years about the risky practices of the government-sponsored mortgage giants, Fannie Mae and Freddie Mac, which helped spawn the mortgage crisis.  Liberal Congressional leaders turned a deaf ear to his pleas for reform, blocking reform legislation and claiming that the leadership of the fraud-ridden…

Read the full story

Unfettered greed is the suspect many point at to explain the current economic crisis. To some extent, they are right, but it isn’t irrational greed on the part of bank managers or fat cat CEOs. It is the unwieldy bank regulations that forced the entire industry to walk the proverbial plank and then blame it for drowning.

Critics have alternately claimed that over-regulation and under-regulation are the causes for the current crisis. I believe one specific regulation, the Community Reinvestment Act…

Read the full story