When it comes to reporting on the 2008 financial crisis,
many journalists are experts at ignoring the elephant in the room: the
government’s role in spawning the crisis through perverse mandates and
incentives. Peter Wallison, who predicted
years earlier that mortgage giants Fannie Mae and Freddie Mac would run into
trouble, highlights
this in The Wall Street Journal. As he observes, on “the fifth
anniversary of the Lehman Brothers collapse, the media have been full of
analyses about what happened in those fateful days.” But ”any discussion of the
government’s central role in the disaster is neatly avoided. This historical
airbrushing is something of a feat, given the facts.”
As he points
out, “At the time of Lehman’s failure, half of all mortgages in the U.S.—28
million loans—were subprime or otherwise risky and low-quality. Of these, 74%
were on the books of government agencies, principally the government-sponsored
enterprises (GSEs) Fannie Mae and Freddie Mac.” But the media barely mentions
this, as if ”the vast majority of the subprime mortgages that the”
government-sponsored mortgage giants “bought didn’t exist.” For example, they
ignore the key role of the federal Department of Housing and Urban Development
in causing the mortgage crisis:….To Read More…
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