Which Political Party is responsible for the current economic problems?
Here are all the FACTS regarding who tried to and did not try to regulate the economy. In end, I say the problem was all of us, would you agree?
Fact 1) Deregulation of banks was passed under the Gramm Leach Bliley Act (GLBA) in 1999 (under Clinton) – Althought this allowed banks to expand beyond traditional regulatory controls, the affects have been both good and bad. It has allowed many of the larger banks to cross into different financial services making them more stable (the reason why Citibank, JP Morgan, and Bank of America haven’t gone under)
Fact 2) Regulation of Accounting Practices by public corporations was passed under the Sarbanes Oxley Act (SOX) in 2002 (under Bush). The affectiveness of the bill is still debated. Many argue the bill has put into affect many costly practices which actually disadvantge domestic corporations. Still, this was an attempt at financial regulation.
Fact 3) Greenspan warned of trouble, nobody really listened about Fannie Mae and Freddie Mac:
“The strong belief of investors in the implicit government backing of the GSEs (Government-Sponsored Enterprises) does not by itself create problems of safety and soundness for the GSEs but it does create systemic risks for the U.S. financial system as the GSEs become very large,” he said.
Additional Facts) The truth of the matter, the current financial problems had a number of factors, check out the factcheck.org article, it notes the causes as:
-The Federal Reserve, which slashed interest rates after the dot-com bubble burst, making credit cheap.
-Home buyers, who took advantage of easy credit to bid up the prices of homes excessively.
-Congress, which continues to support a mortgage tax deduction that gives consumers a tax incentive to buy more expensive houses.
-Real estate agents, most of whom work for the sellers rather than the buyers and who earned higher commissions from selling more expensive homes.
-The Clinton administration, which pushed for less stringent credit and downpayment requirements for working- and middle-class families.
-Mortgage brokers, who offered less-credit-worthy home buyers subprime, adjustable rate loans with low initial payments, but exploding interest rates.
-Former Federal Reserve chairman Alan Greenspan, who in 2004, near the peak of the housing bubble, encouraged Americans to take out adjustable rate mortgages.
-Wall Street firms, who paid too little attention to the quality of the risky loans that they bundled into Mortgage Backed Securities (MBS), and issued bonds using those securities as collateral.
-The Bush administration, which failed to provide needed government oversight of the increasingly dicey mortgage-backed securities market.
-An obscure accounting rule called mark-to-market, which can have the paradoxical result of making assets be worth less on paper than they are in reality during times of panic.
-Collective delusion, or a belief on the part of all parties that home prices would keep rising forever, no matter how high or how fast they had already gone up.
There is an old engineering saying, to have something break takes a single point of failure, and to have an entire system fall apart and become FUBAR takes MULTIPLE points of failure.
Sources:
http://en.wikipedia.org/wiki/Gramm-Leach-Bliley_Act
http://en.wikipedia.org/wiki/Sarbanes-Oxley_Act
http://money.cnn.com/2005/05/19/news/economy/greenspan_fannie/
http://www.factcheck.org/elections-2008/who_caused_the_economic_crisis.html
No related posts.
You missed the Jimma (everyone should have a house) Carter programs that were refined under Clinton.
That’s all very nice. It also completely ignores the fact that the Republicans controlled both houses of Congress for most of the last 20 years, AND controlled the White House for the last 8, and yet they did nothing.
But yes, you can’t blame just one party. The Democrats are also partly to blame. But the buck stops at the president’s desk. He doesn’t get to disclaim responsibility for what happens under his watch.
Republican President George W. Bush is responsible.
Just check out the national Debt.
Just look at the national job loss rates.
Just look at the fasted falling wage rates under Bush.
I do not agree that it was ‘ALL OF US” who contributed.
My husband and I both work, we pay our taxes, we keep one credit card which we pay off every 1 to 2 months in full. We have a modest mortgage and have always made our payments on time. We live within our means. We try to buy American, and buy locally grown fruits and veggies.
Don’t blame everyone.
Plus, everyday American’s are doing the spending in Washington, and we aren’t passing the laws and bills that are not good for our economy, and our jobs.
Everything has been top-down for the past 7 1/2 years, and nothing good has come of it.
I blame Bush mostly.
As the factcheck.org article points out, if we want to assign blame for our current crisis, there is plenty of blame to go around. But the most important point is that, “…these sorts of partisan caricatures can only make the task [of resolving the crisis] more difficult.”
I don’t give a damn who, or which party, created the crisis. I want to see it resolved. Let future historians write books about responsibility. But we need some fairly current historians to write, and soon, about how we resolved it and got back on track. This is a crisis that threatens the foundations of our economy and jeopardizes the financial security of our citizens.
If someone sets fire to your house, you will call the Fire Department first to come put out the fire. Only then will you call the Police Department and the Arson Squad to determine who set the fire. That’s what we need to do here.
We should learn a lot from this debacle. The most important thing is that Congress is not a good regulator because our elected officials do not understand many of the things they regulate. They don’t know the difference between a mortgage and a mountain or between an oil well and a wishing well.