"Night is day," "slavery is freedom," okay David Brooks edited those lines out of his column on Fannie Mae today, but this is pretty much how the rest of it reads. He tells us that the economic crisis was the result of Fannie Mae pushing bad mortgages and buying off everyone who tried to stand in their way.In my opinion, Baker should have taken the whip to Obama and given him more of a thrashing. Obama has failed miserably to take this Great Recession seriously. He apparently wants to outdo Hoover in posing as "the Great Engineer" with a heart of gold but surrounded by Hoovervilles stuffed with the shattered people who by no fault of their own have had their lives ruined by Obama's buddies, the "financial engineers" of Wall Street.
There's a small problem in this story. The worst junk mortgages that inflated the housing bubble to extraordinary levels were not bought and securitized by Fannie and Freddie, they were securitized by Citigroup, Merrill Lynch, Goldman Sachs, Lehman and the other private investment banks. These investment banks gobbled up the worst subprime and Alt-A garbage that sleaze operations like Ameriquest and Countrywide pushed on homebuyers.
The trillions of dollars that the geniuses at the private investment banks funneled into the housing market were the force that inflated the bubble to its 2006 peaks. Fannie and Freddie were followers in this story, jumping into the subprime and Alt-A market in 2005 to try to maintain market share. They were not the leaders.
It is incredible, that even after the collapse of the housing bubble has wrecked the economy and wiped out the life's savings of tens of millions of middle class and moderate income families (these is why people are not spending, it has little to do with "pessimism"), there is still so little effort to re-examine the fixation on homeownership in this country.
Why on earth is President Obama looking to push a renewed Fannie and Freddie type system? Does the public really need to subsidize mortgage interest rates through a government guarantee system, in addition to the mortgage interest deduction?
Brooks might devote some of his fire to these loonie schemes. He might also shoot at the whiners who think no one will issue a mortgage if they have to maintain a 5 percent stake in it. And, he might also call for some criminal investigations of the banks that pushed and securitized fraudulent mortgages. But none of this seems to fit Brooks' agenda.
And what makes this scenario particularly galling? In 1933 the American voter had a party to the left of Hoover, a party with a campaign slogan to get the country moving again. In 2012 the American electorate will have a choice of a party to the right of Obama whose only electoral goal will be to cut taxes on the rich so that the 30 year charade of stealing from the poor to give to the rich can continue! In short, voters in 1932 had a choice, but in 2012 voters can choose between "Hoovervilles for millions versus Hoovervilles for tens of millions"...
Or should I be calling the homeless centres and the people sleeping in boxes in urban centres "Obamavilles"?