On Friday, Investors.com posted an article about Elizabeth Warren‘s objections to the budget bill because of bank risk.
The article reports:
Warren last week took to her socialist soapbox to try to torpedo the “cromnibus” spending bill. She warned legislators they would be blamed for another financial crisis if they dared to vote for any appropriations legislation that includes anti-Dodd-Frank provisions.
Pontificating from the Senate floor Thursday, Warren railed against Republicans and fellow Democrats alike for adding a provision to the bill to restore to banks the right to use derivatives to hedge risks for customers.
She claimed repeal of the regulation “would let derivatives traders on Wall Street gamble with taxpayer money and get bailed out by the government when their risky bets threaten to blow up our financial system.”
Added Warren: “These are the same banks that nearly broke the economy in 2008 and destroyed millions of jobs. The same banks that got bailed out by taxpayers and are now raking in record profits.
“A vote for this bill is a vote for taxpayer bailouts of Wall Street,” she continued.
But where was she three days earlier, when Fannie and Freddie unveiled new low-income mortgages with just 3% down payments? The move encourages the kind of risky lending that actually caused the crisis, yet she didn’t say a peep.
The taxpayer bailouts of Wall Street go back to the Community Reinvestment Act, passed by Jimmy Carter and revised in 1994 to repeal some restrictions on interstate banking.
The article explains what actually happened:
The “main culprit” in the housing crisis was Fannie and Freddie and their mission regulator, HUD, which was cheered on by affordable-housing zealots in the House like Warren’s pal Barney Frank.
HUD pressured Fannie and Freddie to make high-risk loans to “underserved” borrowers, and to do that they had to lower their underwriting standards to the point where they were buying as many subprime loans as prime. While HUD was enforcing its affordable-housing quotas, down payments plunged along with credit scores.
When the housing price bubble burst, those loans were the first to default. When the music stopped, a whopping 77% of all the bad loans ended up on the books of Fannie and Freddie and other federal agencies — not Wall Street banks.
The evidence of government guilt in the crisis is overwhelming. Yet Warren keeps up the false narrative.
Unfortunately, that false narrative has been used for so long that uninformed voters believe it. Part of what is needed to change the politics of Washington is an educated voter. Until voters learn to look past what the mainstream media is telling them, the government will continue to make reckless decisions that result in taxpayer money being used to correct government mistakes.