On Friday, Investor’s Business Daily posted an article about plans by Republicans to redo some of the reforms put in place after the 2008 housing bubble crash.
The article reports:
One of the great follies of the 2010 Dodd-Frank reforms is that it let Democrats pretend that “Wall Street greed” was to blame for the financial crisis. In a brilliant bit of jujitsu, Democrats used that false narrative to create a mass of new regulations — and a new super-regulator, the CFPB, giving it sweeping, near-dictatorial and likely unconstitutional regulatory control over nearly all lending in the U.S., from major mortgage lenders to payday lending shops.
It was created under false pretenses. The fact is, government, not Wall Street, was to blame for the crisis. Research by Edward Pinto, former executive vice president and chief credit officer for Fannie Mae, found that by 2008 more than half of all mortgages in the U.S. were subprime or otherwise risky, and 76% of those were on government agencies’ books. And it is an indisputable fact that, from the Clinton administration on, government regulations required banks to lend to uncreditworthy borrowers, or face stiff penalties.
“This leaves no doubt that government housing policies — and not a lack of regulation — created the demand for these risky mortgages,” wrote American Enterprise Institute Senior Fellow Peter Wallison, who sat on the government’s 2009 Financial Crisis Inquiry Commission, the official investigation into the crisis.
The article reminds us that since the creation of the CFPB in 2010, there has been a near-decade long credit slump which has crippled the nation’s financial industry. Both Dodd-Frank and the CFPB have severely hurt economic growth in America.
The article concludes:
We’re happy to see that Congress wants to seriously reform the CFPB. We’d be even happier if they just got rid of it.
That is a wonderful idea.
For an honest history of the housing bubble, I strongly recommend this video: