The Titanic sails at dawn - politics, economics & culture
Wednesday, July 20, 2011
More on Fannie and Freddie - and the intentional ignorance of Mr. Brooks and Mr. Will
In the wake of the financial crisis of 2008, conservatives who rail against government regulation and for the efficacy of unfettered markets have had to circle their wagons and regroup. The crisis was caused by raging greed, lack of transparency in a huge and highly-leveraged market, and the ability of a few powerful players at the pinnacle of our financial system to endanger the global economy and rob millions of wealth, employment and confidence in the economic and political system.
In order to regain control of their anti-government, free-market narrative we've seen attempts to blame the government-backed mortgage giants, "Fannie Mae" and "Freddie Mac," for creating the conditions that led to a near-total collapse of the housing market, while the big players walked off with enormous rewards for their nihilistic behavior.
This argument has been brewing since the earliest days of the crisis, but most recently two conservative pundits who have some credibility with "thinking liberals" have indulged themselves in the "it's Fannie and Freddie's (ergo, the government's) fault" line of defense for their faith in "free enterprise" ideology.
Both David Brooks and George Will have written high-profile columns mining a recent book that focuses the bulk of the blame for the 2008 meltdown on the "Government Sponsored Enterprises" Fannie and Freddie. Brooks called the role of the GSEs in allegedly causing the crisis of 2008 "the most important political scandal since Watergate" and Will claimed that the former head of Fannie Mae "may be more culpable for the peacetime destruction of wealth than any individual in history."
As we have noted previously - and not terribly surprising for a Will or Brooks column - the problem with their arguments about the roots of the crisis is that they aren't honest and are based on assertion, not evidence.
Jeff Madrick and Frank Portnoy take the source of these columns apart fairly definitively in a recent New York Review of Books piece:
Both David Brooks and George Will have written high-profile columns mining a recent book that focuses the bulk of the blame for the 2008 meltdown on the "Government Sponsored Enterprises" Fannie and Freddie. Brooks called the role of the GSEs in allegedly causing the crisis of 2008 "the most important political scandal since Watergate" and Will claimed that the former head of Fannie Mae "may be more culpable for the peacetime destruction of wealth than any individual in history."
As we have noted previously - and not terribly surprising for a Will or Brooks column - the problem with their arguments about the roots of the crisis is that they aren't honest and are based on assertion, not evidence.
Jeff Madrick and Frank Portnoy take the source of these columns apart fairly definitively in a recent New York Review of Books piece:
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