Do politicians learn from history’s mistakes?
The answer is an uneqivocal and resounding no.
Two U.S. Democratic lawmakers want Fannie Mae and Freddie Mac to relax recently tightened standards for mortgages on new condominiums, saying they could threaten the viability of some developments and slow the housing-market recovery, the Wall Street Journal said.
One of those Democratic congressmen is Barney Frank, of course.
You know, the same Barney Frank who said about Fannie and Freddie, “These two entities—Fannie Mae and Freddie Mac—are not facing any kind of financial crisis,” back in 2003 before the two organizations imploded on themselves once many of those securitized mortgages which it held were found out to be “toxic”.
These mortgages were “toxic” because the government forced loosened standards for people to get those mortgages and the banks, especially the central bank, opened the money spigot for people who are highly risky. Barney’s brilliant idea is essentially the same thing that lead up to the mortgage crisis, but instead with condos as opposed to houses.
Good thing he’s not chairman of the House Financial Services Committee… oh wait.
Dustin Anderson is currently working towards his BBA in Economics, Banking & Finance at Northwood University in Midland Michigan and is the owner and main contributor of Rational Conduct. To contact Dustin send him an email.
How can we construct a government where decisions are made based on long term goals that improve our country, rather than decisions made that only benefit the reelection of the politician? I think politicians are reacting quite rationally to this economic crisis based on the rules of the game. It’s better politically to be seen coming to the rescue now than trying to slow down our overheating economy before we explode. I believe any congressman seen trying to slow the expansion of personal wealth (home equity?) before the crash would be soundly beaten in the following election.
@RAY PREBY
I wish I could say I have a good answer for you Ray. I don’t know if it’s possible to solve the mess we are in with politics. But, of course, “the deciders” would have you believe that your government is on the case and working on fixes to solve our economic woes.
I think the only real solution is to educate ourselves and those around us that the solution is not more government intervention, but rather less government intervention. To accomplish we have to make a coherent and convincing case for this and many of us are doing as such, but it’s difficult to get the word out when there is so much politics “clouding” up the issues, so to speak.