Subscriber SR wrote:
Am I wrong that sometime during the Clinton administration they decided that banks needed to lend to “people of color in the less desirable parts of the cities?”

This then forced the banks to make loans which they knew could not be paid. They had to figure a way to make it safe for them, hence the packaging and sub-prime debacle.

That to me makes it a government created problem which financial people solved in the only way possible: they packaged it and sold it to suckers. Where would we be if the government had not mandated those loans to people who only deserved them because they were minorities?

I agree private enterprise is certainly capable of evil on their own. It is just that government does it worse and with less recourse.

I replied:
You are entitled to your opinion. But I disagree. Nobody forced the banks into this tactic. They did it because they thought it would pay. 

The US government subsidizes mortgages through the tax code. It created Fannie Mae and its rival Freddy Mac to encourage home ownership. Both of these goodies predate Bill Clinton’s administration.

So did rules against “red-lining” which cuts lending to people of color in less desirable neighborhoods. All this has been part of US policy for ages, backed by both parties.

As FNMA was a big source of funding for the Democrats, the Republicans finally got it “so-called ha-ha” privatized.

How do you get from this to blaming the government for the practices by the banks over mortgage backed securities, a market they voluntarily entered in order to compete with FNMA? This seems to me to be a reversal of the reality.

Banks went in for NINJA lending because they figured they could always repossess the homes of people of color in lousy neighborhoods because real estate prices would rise forever.

They were wrong. so were the borrowers, those who lied and those who told the truth. So were those who sliced and diced the mortgages for the banks, So were those agencies which rated them AAA. So were those who bought the CDOs which were so safe and paid so well.

But why do you think the government is at fault except based on some prejudice? There is plenty of blame to go around and not hit poor Mr. Clinton, who has so many other things feel guilty about.

We have readers across the political spectrum. In contrast to SR, here is what reader SF wrote.

Bravissima for this email!

President Reagan promised fiscal responsibility. At the end of his terms there were a trillion dollars of new federal debt; far more millionaires and some billionaires created, thanks in part to lower income taxes; tens of thousands of good factory jobs exported, many with help from USAID funding; a bigger, not smaller federal government; EPA gutted; the costs of the deregulation-instigated savings and loan crisis; and federal deficits as far as the pre-Clinton era eye could see.

As for ‘too big to fail’, in the financial sector that really means: too big for us to afford.

Oliver Wendell Holmes said it right: taxes are the price of civilization.

My business does not gain from political controversy. I had two cancellations this week, one from a Californian named Mohammed over my alleged support of Israel, and another from a disgruntled standard American over politics.

While I know bashing unions and strikes has become something of a shibboleth among Americans, I’m reminded of the Polish Solidarity movement and Lech Walesa when I read about Chinese workers picketing and demanding a union. They work for Japanese and Taiwanese firms seeking cheap, abundant, and docile labor. What these foreign companies are getting is The Weavers:

Oh you can’t scare me; I’m sticking to the union

I’m sticking to the union, till the day I die.

To keep in business, I will stop getting into US political debates until I cannot resist commenting again. More on British, Argentine, Spanish, Singaporean, Korean, Swiss, Brazilian, and South African shares, and a ‘sans-commentaire” note regarding a controversy in France. To read on, subscribe. We offer a $25 day pass which will let you test our subscription service.