Was the mortgage meltdown the fault of Republicans or Democrats? Was it caused by the ideology of deregulation or of regulation?
Questions like that are fun to debate because they follow the usual fault lines that divide the country into fairly equal and thus intensely rivalrous halves.
But let’s think about the Housing Bubble from a more general standpoint for a moment. Is it terribly likely that a disaster that long gestated and then ran amok in plain sight for over three years (from 2004 into early 2007) would turn out to be overwhelmingly the fault of a single party or ideology?
Why wouldn’t the opposition have sounded the alarm? Don’t the Republicans and Democrats, as well as the free marketers and the leftists, all have well-oiled publicity machines for pointing out the shortcomings of their enemies?
Isn’t it more plausible that a vast, slow-motion catastrophe would be the result of a noncontroversial bipartisan consensus?
Sue Kirchhoff reported in USA Today on April 17, 2007 inSubprime lenders’ big gifts helped lawmakers:
“The nation’s top subprime lenders, including New Century Financial(NEWC), which has filed for Chapter 11, have lavished generous donations on homeownership programs sponsored by black or Hispanic members of Congress. The paid sponsorships give lenders an entree to lawmakers and their constituents. Along with New Century, backers include Countrywide Financial(CFC), which settled a New York fair-lending investigation in 2006 by agreeing to compensate black and Latino borrowers for improper loans and set up a $3 million consumer-education program. Another is Ameriquest Mortgage, which in 2006 agreed to a $295 million settlement with state attorneys general who charged it with improper lending practices.”
Similarly, Susan Schmidt and Maurice Tamman of theWall Street Journal reported on January 5, 2009 inHousing Push for Hispanics Spawns Wave of Foreclosures: