Catholic Citizen

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GOP’s latest ugly fable

If the economic situation weren’t so grim, it’d be darkly amusing watching conservatives hunting for a scapegoat other than Bush administration True Believers. Hey, they’re all Brownies now. Heckuva job. For a generation, devotees of the very bad novelist Ayn Rand have assured us that greed is a virtue and government oversight of financial institutions an impediment to genius. In the “ownership society,” financial regulations were for pantywaists. In GOP-think, governments exist purely to drop bombs and monitor other people’s sex lives. Financial deregulation has been the Republican miracle elixir since Ronald Reagan. Back in March, Sen. John McCain reassured The Wall Street Journal that despite being “aware of the view that there is a need for government oversight” in debacles like the sub-prime lending crisis, “I am fundamentally a deregulator.” In between winks and shout-outs to “Joe Sixpack” during the vice-presidential debate, Sarah Palin also wanted it both ways. She praised McCain for “pushing for even harder and tougher regulations.” Then she said patriotism means saying, “Government, you know, you’re not always the solution. In fact, too often you’re the problem, so government… get out of the way and let the private sector and our families grow and thrive and prosper.” Meanwhile, naïve, otherworldly progressives argued that mortgage lenders needed regulators in the back room for the same reason they needed locks on the front door. You’d think that any adult who’d ever bought real estate, avoided losing his life savings to Nigerian e-mail scams or even spent rainy afternoons playing Monopoly as a child would understand this fundamental fact of human nature: If you make it easy for people to steal, they’ll steal everything, including the silverware and Grandma’s dentures.

Alas, too many heeded pie-in-the-sky GOP theology. The miracle-working market absolved us all from sin; hence, from the Reagan-created savings-and-loan crisis onward, corporate financial scandals have grown steadily larger and more dangerous. But abandon dogma ? Never.

Now come GOP apologists to identify the real perps of the Wall Street meltdown: Jimmy Carter, Bill Clinton, feckless black folks, Mexican Americans and U. S. Rep. Barney Frank, who’s evidently been covertly running Wall Street all this time.

See, while you fretted over Bush screwups in Iraq, Afghanistan and New Orleans, a sinister, dusky cabal built a speculative bubble in ghetto real estate. Overpriced luxury condos were constructed with borrowed money in fashionable Harlem, Watts and the south side of Chicago; also, downtown Atlanta, Newark, St. Louis, Detroit, Memphis and Philadelphia. In Monopoly terms, the entire U. S. economy drained into a black hole of defaulted loans on Baltic and Mediterranean.

So how come you haven’t heard this before ? Maybe because you don’t spend enough time watching FOX News or listening to GOP talk radio. In those precincts, the real cause of the national (and world ) financial debacle turns out to be an obscure 1977 law known as the Community Reinvestment Act, or CRA.

Intended to end the practice of “redlining,” i. e., refusing to make creditworthy loans in “bad” neighborhoods, the CRA was enacted under President Carter. To conservative pundits such as Charles Krauthammer, Jeff Jacoby and Laura Ingraham, that’s where all the trouble started.

Supposedly, left-wing activists intimidated bankers into making risky loans to improvident minorities, which caused the whole debacle. Supposedly, too, President Clinton made things worse by revising the rules back in 1995.

Leave it to Ann Coulter to spell things out most clearly. Thanks to Democratic interference with free markets, see, sound methods of appraising mortgage applicants’ ability to repay loans were replaced by “nontraditional measures of creditworthiness, such as having a good jump shot or having a missing child named ‘Caylee.’” As a result, she recently wrote, “Middleclass taxpayers are going to be forced to bail out the Democrats’ two most important constituent groups: rich Wall Street bankers and welfare recipients.” The brutality of this argument is matched only by its stupidity. An alert child would wonder why a 31-year-old law suddenly started causing trouble in 2008. Wouldn’t a lot of those loans already be paid off ? Wouldn’t the same apply to actions that Clinton supposedly took 13 years ago ? Besides, with Republicans controlling the government for the past eight years, how come they didn’t fix it ?

Mainly because it’s utter nonsense. CRA regulations apply only to FDICinsured banks, not the mortgage companies and investment banks, which made 83. 4 percent of sub-prime loans responsible for the crisis. The 1977 law also has nothing whatsoever to do with fraudulent packages of “securitized” mortgage debt taking down investors worldwide. Those are a Bush-era innovation.

Rick Pearlstein, author of the brilliant history “Nixonland,” calls this ugly fable “a modern-day equivalent of the ‘Protocols of the Elders of Zion,’ a Big Lie narrative that blames a despised, outcast social group for problems they had nothing to do with.” A naïve person might imagine that these people would have some shame.

—–––––•–––––—Free-lance columnist Gene Lyons is a Little Rock author and recipient of the National Magazine Award.

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October 15, 2008 Posted by | Uncategorized | Leave a comment