(Note, 2/13/13: There is an alternative, updated version of this post designed to address Marco Rubio’s response to the 2013 State of the Union live at Wonkblog. Check it out there.)
Sigh.
Mayor Bloomberg:
It was not the banks that created the mortgage crisis. It was, plain and simple, Congress, who forced everybody to go and give mortgages to people who were on the cusp….But they were the ones who pushed Fannie and Freddie to make a bunch of loans that were imprudent, if you will. They were the ones that pushed the banks to loan to everybody.
My sense is that these are people who can’t accept that some markets, especially financial ones, are disasters when completely unregulated – and thus find any far-fetched excuse to blame the government. But since we are going to hear a lot of it in 2012, how should one respond to the line that Congress and Fannie/Freddie caused the housing crisis?
1. The first thing to point out is that the both the subprime mortgage boom and the subsequent crash are very much concentrated in the private market, especially the private label securitization channel (PLS) market. The GSEs were not behind them. That whole fly-by-night lending boom, slicing and dicing mortgage bonds, derivatives and CDOs, and all the other shadiness of the 2000s mortgage market was a Wall Street creation, and that is what drove all those risky mortgages.
For some data, start here: “More than 84 percent of the subprime mortgages in 2006 were issued by private lending institutions….Private firms made nearly 83 percent of the subprime loans to low- and moderate-income borrowers that year.”
As Center For American Progress’ David Min pointed out to me, the timing doesn’t work at all: “But from 2002-2005, [GSEs] saw a fairly precipitous drop in market share, going from about 50% to just under 30% of all mortgage originations. Conversely, private label securitization [PLS] shot up from about 10% to about 40% over the same period. This is, to state the obvious, a very radical shift in mortgage originations that overlapped neatly with the origination of the most toxic home loans.”
2. The next thing to mention is that the “affordability goals” of the GSEs, as well as the Community Reinvestment Act (CRA), didn’t cause the problems. Randy Krozner summarized one of the better studies on this so far, finding that “the very small share of all higher-priced loan originations that can reasonably be attributed to the CRA makes it hard to imagine how this law could have contributed in any meaningful way to the current subprime crisis.” The CRA wasn’t big enough to remotely cause these problems.
For the GSE’s, I’d recommend checking out Jason Thomas and Robert Van Order, A Closer Look at Fannie Mae and Freddie Mac: What We Know, What We Think We Know and What We Don’t Know, which, in addition to explaining how their affordability mission is a distraction, argues that subprime was only 5% of the GSEs losses and the GSEs bought the highly-rated tranches of mortgage bonds for which there was already a ton of demand.
3. This is not exactly an obscure corner of the wonk world – it is one of the most studied capital markets in the world. What has other research found on this matter? From Min:
Did Fannie and Freddie buy high-risk mortgage-backed securities? Yes. But they did not buy enough of them to be blamed for the mortgage crisis. Highly respected analysts who have looked at these data in much greater detail than Wallison, Pinto, or myself, including the nonpartisan Government Accountability Office, the Harvard Joint Center for Housing Studies, the Financial Crisis Inquiry Commission majority, the Federal Housing Finance Agency, and virtually all academics, including the University of North Carolina, Glaeser et al at Harvard, and the St. Louis Federal Reserve, have all rejected the Wallison/Pinto argument that federal affordable housing policies were responsible for the proliferation of actual high-risk mortgages over the past decade.
The other side has virtually no research conducted that explains their argument, with one exception we’ll cover in a second.
4. For fun, we should mention that the conservative think tanks spent the 2000s saying the exact opposite of what they are saying now, and the opposite of what Bloomberg said above. They argued that the CRA and the GSEs were getting in the way of getting risky subprime mortgages to risky subprime borrowers.
My personal favorite is Cato’s Should CRA Stand for “Community Redundancy Act?”, (2000, here’s a writeup by James Kwak), arguing a position amplified in Cato’s 2003 Handbook for Congress Financial Deregulation Chapter: “by increasing the costs to banks of doing business in distressed communities, the CRA makes banks likely to deny credit to marginal borrowers that would qualify for credit if costs were not so high.” Replace “marginal” with Bloomberg’s “on the cusp” and you get the idea.
Bill Black went through what AEI said about the GSEs during the 2000s here and it is the same thing – it was blocking subprime from being made. Peter Wallison, 2004: “In recent years, study after study has shown that Fannie Mae and Freddie Mac are failing to do even as much as banks and S&Ls in providing financing for affordable housing, including minority and low income housing.”
5. There’s an argument that the GSEs had huge subprime exposure if you create a new category that supposedly represents the risks of subprime more accurately. This new “high-risk” category is associated with a consultant to AEI named Ed Pinto, and his analysis deliberately blurs the wording on “high-risk” and subprime in much of his writings. David Min broke down the numbers, and we wrote about it here. Graphic from Min’s follow-up work, addressing criticism:
Even this “high risk” category isn’t risky compared to subprime, and looks like the national average. When you slice it by private-label, the numbers are even worse. Private label loans “have defaulted at over 6x the rate of GSE loans, as well as the fact that private label securitization is responsible for 42% of all delinquencies despite accounting for only 13% of all outstanding loans (as compared to the GSEs being responsible for 22% of all delinquencies despite accounting for 57% of all outstanding loans).” This issue isn’t this fake “high risk” category, it is subprime and private-label origination.
The Financial Crisis Inquiry Commission (FCIC) panel looked carefully at this argument, and also ended up shredding the argument to nothing. So even when those who blame the GSEs make up categories, they can’t get the numbers to work.
6. The three Republicans on the FCIC panel rejected the “Blame the GSEs/Congress” approach in their minority report. Indeed, they, and most conservatives who know this is a dead-end, tend to do a “it’s a whole lot of things, hoocoodanode?” approach.
Peter Wallison, made this GSE argument when he served as the fourth Republicans on the FCIC panel. What did the other three Republicans make of his argument?
Check out these released FCIC emails from the GOP members. They are really fun, because you can see the other Republicans doing damage control and debating whether Wallison and Pinto were on the take for making this argument – because the argument makes no sense for those looking at the data.
Lots of great quotes like: “Re: peter, it seems that if you get pinto on your side, peter can’t complain. But is peter thinking idependently [sic] or is he just a parrot for pinto?”, “I can’t tell re: who is the leader and who is the follower.”, “Maybe this email is reaching you too late but I think wmt [William M. Thomas] is going to push to find out if pinto is being paid by anyone.” And the infamous event where Wallison emailed his fellow GOP member: “It’s very important, I think, that what we say in our separate statements not undermine the ability of the new House GOP to modify or repeal Dodd-Frank.”
Good times. The GSEs had a serious corruption problem and were flawed in design – Jeff Madrick and Frank Partnoy had a good column about the GSEs in the NYRB recently that you should check out about all this – but they were not the culprits of the bubble.
Rortybomb 
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When congress conducted several mortgage servicing hearings, I noticed that some of the congress people on the panel would discuss their own experience with home loans going back as far as the late 70’s.
It actually seemed like some of them did not get that the banks were no longer the actual originating loan source.
Ironically, all of that pension money floating around seemed to motivate wall street to come up with all kinds of unethical investment schemes as well.
Even those arguing that the fair housing act was the culprit might have to admit that if the banks actually made the loans, restructuring the loan and simply take less in profits could have averted many of the foreclosures. But since the loans were originated with outsider money, that could not be done.
This gets us back to the rescinding of Glass-Steagall as one of the leading causes of the housing market being rife with the wrong kind of investment money, no?
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I’ve read and reread your serial debunking of those trafficking in the “the GSEs did it” lie at various points over the past year or so and have neglected to express my thanks for your thoroughness and diligence.
In this case, that being Mikey Bloomberg, I think his reuse of zombie lies was done with the full consent of the will. Now, under direct Q&A, a well-informed interviewer (interrogator?) might be able to pin Mikey down as to what he does and doesn’t actually understand about the facts of the matter. In the end, however, I see no empirical reason why someone as wealthy, wedded to the FinServ machinery and still deeply ambitious in his pursuit for public/political self-aggrandizement as Mickey is has any reason to tell even one truth about the abject failure of his class, his in-group approved beliefs and his entitlement to state truth as he, a rich and powerful American, sees it – regardless of the facts.
I expect such BS to continue until the tolls of accountability are paid in full by the real perpetrators of the ruination of the world’s financial infrastructure.
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this crisis is ultimately attributable to leverage and not enough equity skin in the game. Leverage on main street, leverage on wall street, leverage on household balance sheets, leverage in government policy (lack of counter-cyclical monetary and fiscal policy). you can point a finger at one of those sectors and the Occupy crowd pointing at Wall Street and Bloomberg here pointing at government policy, and they could both be right but everyone has the proverbial turd on their shoe. Much of what you say here is true, and much of what Morgenstern and Rosner argue in Reckless Endangerment is also true. What nobody can deny is that Fannie and Freddie balance sheet leverage (70x) at the top of the real estate market made the investment banks (30x) look modest, and that huge increase in their balance sheet and contingent liability risk in a grab for market share had a not insignificant effect on the race to the bottom lending standards that went on at the top of the market mid-decade. The sooner we stop pointing fingers at one particular sector, the faster we can all collectively look in the mirror and try to rectify the part each sector played in the crisis.
Why do people want to let the bankers off the hook? Saying “everyone has the proverbial turd on their shoe” is failing to mention that the bankers are knee deep and borrowers have already wiped their share off. Anyone who has investigated this even a little bit says the amount of loans that were bad could not have caused a crisis this large. The crisis exists because the bankers started a betting market on the bad loans that allowed the players to bet well beyond the loan value. Or maybe you have research that says otherwise?
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My first reaction to Mayor Bloomberg’s comments was that I had just heard the exact party line BS from Richard Grasso (former head of the NYStock Exchange). This is pure ideology, and these folks will never let facts stand in the way of what they believe, or the political agenda they are pushing. It doesn’t play as well to the base to admit that banks screwed up; it totally plays when you claim to have “proof” that once more, “government is not the solution, government is the problem.”
I am thoroughly convinced that Bloomberg does not actually believe the bullshit he’s pushing. If a lay person like myself can find the congressionally mandated audit of the CRA loan profile order in the Gramm-Leach-BLiley legislation and learn that CRA loans just as healthy as traditional mortgages and were held to a pretty high standard (Until a republican congress expanded the CRA in 2003), then a man who’s entire adult life has been spent successfully navigating the halls of big finance can not be assumed to be out of that loop. And the assertion that Barney Frank be held criminally liable (I’m pointing that finger directly at Newt) when he had zero policy sway in the financial services committee until January 2007 is completely ludicrous knowing the GSE’s went all in under republican leadership in 2003 or so.
This is nothing but consequence avoidance and the more that pushback like this occurs in the media, the better positioned America will be to correct the flaws that have grown in our financial services.
And this is for Hontien, If you continue to lie to yourself about the flawed policy positions our government took over the course of 2 decades, (3 actually), how in the hell can you ever expect to effectively correct them? Keep telling yourself that elephant in the room is a kitty cat.
The real trick here is to take all this good analysis, and make it publicly accessible. *Not* doing that is exactly what the other side hopes will happen, too–in fact, it’s a big part of their strategy. The wall of cognitive dissonance in disregarding contrary / damning facts is thick and solid enough *when the data are simple and easy to understand.* But when the data are esoteric, it’s really tough to drive any kind of counter “meme.”
A: Is it not true that the mortgages written by private entities were then usually purchased by GSE’s so that moneys were freed up and more mortgages could be written? And isn’t it true that the Community Reinvestment Act radically altered the terms in which these mortgages could be purchased?
B: Isn’t it true that New York City would be barren if it were not for the massive tax revenues generated by Wall Street, and that people who live in New York are harming the City by attacking Wall Street? Don’t the residents outside of NYC have a much more substantial gripe against the Wall Street miscreants?
A. As noted in the article there was a HUGE market for mortgages. GSE buying did not play a large role. As for CRA changing the rules, you understand the issue was the private lenders did not follow the rules right?
B. The bankers caused the largest decrease in wealth ever due to their fraudulent business practices. But because they pay a lot of taxes we should just not worry about that? So you are saying the rich do not need to follow the same rules as the poor?
A. No and no. If you believe otherwise, you know what it likes to have been fed knowingly disinformative propaganda and gobbled it up and asked for seconds. The next step is to acknowledge that fact, and actively make a choice not to be ignorant. Assuming you’re so inclined.
As for B, you’re certainly right that New York City dances to the tune of high finance. So does the rest of the country by the way, (Bill Gross’s “finance based-economy” investment outlook, was a real eye opener in that regard when I read it some eight years ago, though it wouldn’t have been if I had read these earlier and more prescient pieces by Norman Gall beforehand). But in neither case does that mean that finance has made anyone better off. Quite the opposite. (financiers excepted of course).
Darkness on one side. Light on the other. Choice is yours I’m afraid.
One problem is that the New York Times’s Gretchen Morgenstern has decided to turn herself into the Judy Miller of the financial crisis by repeating and endorsing Wallison’s canard — as painstakingly documented by Madrick and Partnoy in their NYRB review of her book.
This gives the conservative propaganda machine the highly valuable advantage of being able to say: “Hey, if even the liberal New York Times’s financial reporter admits its true, it must be true.”
With liberals like that, who needs conservatives?
Agreed. If only these GSEs weren’t partially public, and therefore much easier to get he records and data on. Try getting any uncooked data from JPM or Wells or BofA or Goldman. ‘Public’ companies in name only, their actual doings as well-hidden as those in any private company.
Much as I’ve enjoyed Gretchen’s day-to-day efforts, apparently low-hanging fruit plus conglomerate publisher’s book deal equals Republican Party line. Disappointing, at least.
Sadly, both Democrats and Republicans, both left-wing and right-wing, are dodging the real issue. Perhaps that is because they both recognize that they are nearly equally to blame.
It is clear that Fannie and Freddie did not cause the subprime bubble or burst. What is certainly clear, and what should be the focus of the discussion, is that Fannie and Freddie were incompetently managed and regulated and that the continued need for their services was far from certain. This suggests that the GSEs may have been an unnecessary burden, a poorly regulated one at that, and poorly managed in a way that ensured the taxpayers would be on the hook for liabilities that far outweighed the benefit conferred upon low-income home buyers.
What concerns me in this debate is that by arguing whether GSEs were to blame – and they clearly were not – we will exonerate them from all of their mismanagement. There were, and remain, fatal problems with GSEs that must be addressed before they are released from conservatorship by the Treasury.
In response to (1) through (6)…
1) I do not dispute any of the data in point 1. I would only add that while GSEs may have had less portions of certain sectors of the mortgage market (primary and secondary), the portion of the GSE balance sheets composed of MBS that contained subprime, Alt-A, and other low quality mortgages grew steadily, from 10 percent to 22 percent in that same time period. Is that sound risk management? How was that able to occur without any action by the (then) OFHEO or without any significant action by Congress?
2) The focus on the CRA baffles me, too. I think there is a greater issue with the ability of GSEs to purchases MBS containing subprime mortgages and using this as credit toward the GSEs’ housing goals. That created an incentive for the GSEs to purchase more garbage mortgages. That provision did not force GSEs to purchase garbage mortgages, but their incompetent officers and pliant board of directors saw nothing wrong with it, in pursuit of their short-term earnings goals. Why was there such incompetent leadership within the GSEs? Why was such an incompetent band of political hacks from both parties able to enjoy a federal charter that bestowed significant competitive advantages over other players in the secondary residential mortgage market? And why were rules than bent to give them even greater leeway to mismanage the GSEs?
3) Agreed. Time to declare victory in the debate and move on to issues related to GSE governance, reexamining whether they are actually necessary in the secondary residential mortgage market (and, if so, to what degree), and modifying their federal charters.
4) I am sure there is might to nitpick with past analyses by AEI and others, but this is weak. There is a difference between encouraging origination of subprime loans and actually assisting with affordable housing. The former, as we saw in the subprime bubble’s growth and burst, is not equivalent to the latter. One can call for more financing for more affordable housing without being a proponent of pushing subprime loans to borrowers who are flipping homes or buying homes with inflated price tags.
5 & 6) Ditto. I’d just like to see more focus upon the decisions made by actual GSE officers and board members, rather than nitpicking critiques of a think tank dork.
Sorry, but the GSE’s don’t enter into it. Had they not existed at all, had the CRA never been created, the de-regulatory fervor of the last 30 years would have brought us to exactly where we are now. Period.
And to attempt to distract from that fact by waving your hands at Fannie and Freddie is to unzip Jamie Dimon’s Savile Row trousers, and service him in public.
There are problems in the prison industry and in the field of public education, and they’ve each got as much to do with this PRIVATE financing collapse as those two GSEs or the CRA.
PS: Any casino that would let someone walk up to a table and bet $3 TRILLION with nothing but a signature and lose, deserves to be buried in its own incompetent stool. The conservative movement built that casino through deregulation and defunding enforcement, and AIG walked in and made that bet. And that’s just one example of the incompetence of their/your ideology.
The GOPicana should be closed. Permanently.
Amen!
I would enjoy reading an explanation of your first paragraph. GSEs created the secondary residential mortgage market by standardizing mortgage terms and facilitating their securitization. De-regulation, by which I presume you mean the 1980s legislation facilitating greater private label competition with the GSEs, expanded the secondary market. The market existed before it was de-regulated (obviously) and was, as noted, created by the GSEs. So, I’m not sure how you can say that GSEs do not “enter into it.”
I am not sure what you are trying to articulate with the rest of your response, or what you are responding to. It sounds as though you think I blame GSEs and/or the CRA for the financial crisis. Even a cursory reading of my original comment shows that this is not the case.
You’re nothing but American-style tough talk, Mr. Damage. Guess what? The banks didn’t bet Three Trillion Dollars. The American majority advised them to lend it — and said, “Don’t worry; we have you covered.” Now, that same majority is whining that it has to pay up.
“A: Is it not true that the mortgages written by private entities were then usually purchased by GSE’s so that moneys were freed up and more mortgages could be written? And isn’t it true that the Community Reinvestment Act radically altered the terms in which these mortgages could be purchased?”
If you can find the language in the 12 USC 2901-8 that manifest this, you can make that argument, but nothing in the act is operative on the GSEs. Go look now, the whole act is like 5 pages.
What is greater?
1. The total liability losses by Fannie and Freddie.
2. The total bailout dollars from General Motors + Chrysler + AIG + Wall St + Banks
1
Housing bubbles appeared all over the globe. Ask Spain if Fannie and Freddie caused city after city in the country to be “filled” with empty condos. Did GSEs cause Spanish unemployment of 21%?
Bloomberg? Getting his talking points directly from the PR/legal departments of our large banks.
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Here’s a rather wordy article refuting the phony right wing claim that Fanny and Freddie caused the mortgage crisis of 2008. In part it states: That whole fly-by-night lending boom, slicing and dicing mortgage bonds, derivatives and CDOs, and all the other shadiness of the 2000s mortgage market was a Wall Street creation, and that is what drove all those risky mortgages.- Private firms made nearly 83 percent of the subprime loans to low- and moderate-income borrowers that year.”
Don’t forget that Fannie and Freddie weren’t the ones getting the ratings agencies to give the bundled subprime bonds AAA ratings. That was Wall Street. And without those ratings, a lot of the money never shows up to loan to subprime.
that huge increase in [the GSE’s] balance sheet and contingent liability risk in a grab for market share had a not insignificant effect on the race to the bottom lending standards that went on at the top of the market mid-decade.
Only if causality and time can flow backwards:
“The shift toward riskier mortgages and private label MBS distribution occurred as financial institutions sought to maintain earnings levels that had been elevated during 2001-2003 by an unprecedented refinancing boom due to historically low interest rates. Earnings depended on volume, so maintaining elevated earnings levels necessitated expanding the borrower pool using lower underwriting standards and new products that the GSEs would not (initially) securitize. Thus, the shift away from GSE securitization to private-label securitization (PLS) also corresponded with a shift in mortgage product type, from traditional, amortizing, fixed-rate mortgages (FRMs) to nontraditional, structurally riskier, nonamortizing, adjustable-rate mortgages (ARMs), and in the start of a sharp deterioration in mortgage underwriting standards. The growth of PLS, however, forced the GSEs to lower their underwriting standards in an attempt to reclaim lost market share to please their private shareholders. Shareholder pressure pushed the GSEs into competition with PLS for market share, and the GSEs loosened their guarantee business underwriting standards in order to compete. In contrast, the wholly public FHA/Ginnie Mae maintained their underwriting standards and instead ceded market share.”
citing: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1669401
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Wait. I thought government could never get anything done, nor do anything right? So, how come – according to Bloomie’s arg. – they were so efficient and effective at mortgage originations that the sheer volume of the GSEs work product could tank the entire global economy?!
Doesn’t seem to be working that way with Timmy’s Mortgage Relief Programs …
I just LOVE to watch some government officials pontificate with such ferocious certainty that government of any kind really sucks. YOU ARE THE GOVERNMENT, DIPSTICK. If you suck so bad, and are so pissed about it, then learn to be better at what you do, or step aside.
I just picture a young Rightie future pol coming of age and having a career epiphany: ‘Government really sucks … hell, … that must be the job for me!’
My guess is you do not understand why Financial Organizations can give out $100M bonuses.
I know you don’t understand why Dick Fuld, Jon Corzine, … are still rich, despite their profound failures as “CEO”‘s. If I am wrong, you will educate me. [My bet – $10(what I can afford 2 lose): You cannot! I would love to post a $10 bill in the Snail Mail to your for my education.
If you did, you would think about how that can happen and come up with a VERY SIMPLE solution that resolves.
Have you?
You have failed to
Study
Think
Propose solutions
and
Accept feedback
on your ‘solutions. (I await your thoughts.)
Those R the basic tenets of science.
Your view of GOVERNMENT Über Alles is AS BAD AS Corporations Über alles
Think. I know you can come up with the same solution I have.
Write me and we can discuss. I dare you!
Ed Bradford
egbegb2 AT Gmail DOT com
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Congress, the GSEs, and investment banks were all part of the system that precipitated the housing bubble. None of these parties should be exonerated. They are all culprits; look at Freddie’s and Fannie’s balance sheets for Pete’s sake. Should PLSs be blamed for lowering underwriting standards? You betcha. But should PLSs also be blamed for GSEs following suit and mismanaging their own balance sheet? Definitely not.
Thanks for this. Two things:
1) what about the effect of the Home Ownership strategy- graph shows biggest changes occurred after it was enacted – what effect did it or did it not have -see this graph
http://voices.washingtonpost.com/ezra-klein/2010/06/clinton_and_the_housing_boom.html
perhaps the change is instead because the of this:
Consider these S&P500 gains in the markets: 1995=34%, ’96=20%, ’97=31%, ’98=27%, and from Oct ’99 to March 2000, the Nasdaq was up 100%.
2)you should add in the point that many countries in Europe had the same housing boom and ask them to please explain how american housing policy made those dirty europeans do the same thing?
Two words…Glass-Steagall.
http://www.counterpunch.org/2008/09/19/shattering-the-glass-steagall-act/
Congress did it’s part by deregulating, and not keeping watch over Wall St., the SEC, nor the ratings companies. Congress has been bought off by the big money. They are all guilty of misuse of power, and other peoples’ money. It is past time to use the incriminating evidence Levin’s permanent Senate Investigating Committee has on the thugs in Wall St., and put these criminals in prison. At the same time, congress needs to sit on the financial institutions so they cannot continue to rape the world.
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Your view of GOVERNMENT Über Alles is AS BAD AS Corporations Über alles
Two straw men? I hope they don’t breed.
Whether or not they were private or not isn’t really relevant in the scope of the entire mortgage market. Of course Fannie/Freddie’s securities had lower default rates – they held significant competitive advantage in the form of lower cost of capital thanks to their subsidies, implied or otherwise from the federal government. Fannie/Freddie could crowd out the private sector out of any market they chose. It was only when Fannie/Freddie had to drop out of the business for a short time to defend their fraudulent accounting techniques that the private sector was able to grab a significant portion of their market. Fannie/Freddie responded by becoming the single largest purchasers of private-label securities making them, not Wall Street, the primary fuel of the subprime crisis.
Also inexcusable is Fannie/Freddie’s incredible use of leverage at 75:1 more than 3 times the most levered bank. It doesn’t matter if your risky securities are marginally less risky than the street’s if you have razor-thin capital ratios and it only takes a couple hundred bps move to wipe out your equity. Moreover, Fannie/Freddie were far worse in all the abuses that have been cited as motivation for the populist anger directed towards banks. The Financial Crisis Inquiry Report supports the intense focus at Fannie on short term profit and quotes the CEO planning to ramp up their exposure to subprime and Alt-A in late 2006 as the banks were heading for the exits.
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What this helps illustrate is something which most people are loath to acknowledge: That Mr. Bloomberg is not very bright. The thought that he must be smart because he has amassed cash is betrayed by his words. Take his recently stated belief that it was Congress ordering banks to make loans to anyone who applied that caused the mortgage collapse. Sheer ignorance. Or his oft stated rationale for raising the NYC real estate tax: that unlike the Federal Government, NYC cannot print more money to cover the budget shortfall. He actually believes that the government in DC prints money to eliminate any debt! That is beyond ignorant. Also, on the real estate tax, he has repeatedly claimed that it will not have an effect on local businesses because only the property owner pays the tax. Clearly, the man has no idea of how a commercial lease is laid out. The taxes ALWAYS get passed down to the leaseholder. These are just three instances of his almost unbelievable lack of understanding of business and economics. I need not go into his total inability to manage the costs of runaway projects or even a simple snow storm. But he is rich, so he must be smart… Well, Bloomberg’s dithering over the historic OWS movement show him to be a deer in the headlights. Perhaps people will see what has been in front of them for years now. He is nothing but an inept salesman, not a crack businessman. When he runs again, and he will, remember this.
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“That whole fly-by-night lending boom, slicing and dicing mortgage bonds, derivatives and CDOs, and all the other shadiness of the 2000s mortgage market was a Wall Street creation, and that is what drove all those risky mortgages.”
That, I take it, is a specimen of the acute analysis that makes this blog worth reading. Speaking of zombie lies …
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