Bush and the Financial Crisis
I'm sure there are lots of ways to hide risks - off-balance sheet and all that. If you're a regulated institution, you've got Tier 1 capital and reserves to worry about. You need a rating agency's imprimatur to show to regulators and shareholders that you've got your risk under control. Or you can "insure" your assets.
As a Sailerite, I've read GWB's horribly irresponsible call for jettisoning the old-fashioned notion of "downpayments" in favor of an "ownership society" many times and despaired at his catastrophic naivety. I'm all for the free market, but to think that these "market-based solutions" can get blood from a stone is just stupidity. But what's gone through my mind lately - what if this wasn't free-market naivete at all?
Isn't it likely that this idea - of pushing no-down-payment mortgages - for poor Hispanic immigrants in particular - was concocted by someone in the mortgage business rather than being some well-intentioned though hair-brained scheme of some neocon ideologue? The hunger for new investment instruments that could be packaged up as AAA-rated securities and insured via CDS was very deep, and so someone figured out that mortgages could sate this appetite, and somehow managed to secure for their sordid plan the endorsement of none other than the President of the United States.
This was a long time ago, too - back in 2002. So who was it - who was the blood-sucker that managed to get Bush's ear - and who was his go-between?
Of course it could well have more simply been Angelo Mozilo pushing for CRA credits in his efforts to expand Countrywide. But he could have been more a pawn in this game as well, being used by those pushing for more securitization opportunities.