There are a couple of very valid points made in the comments although I appreciate the author’s point of view. Not everyone among the investment banks went under or needed bailouts. Brown Brothers Harriman has been invisible because they are still a partnership. Important point. JP Morgan did not need the 25 billion forced on them by the feds and quickly returned it. It was the go-go guys who wanted that last dollar of easy money who got caught without a chair when the music stopped.
Bernard Baruch was once asked how he made his fortune. He answered, “By selling too soon!”
The CRA certainly started the housing bubble and the regulators had to be aware of the “Alt-A loans.” I was and I’m a doctor, not a financier. The entire housing finance industry was living on transaction fees and not the income from interest payments from the loans they wrote. That was a big change from just a few years ago. Why did that happen ? Anybody know what “conforming loans” means ? Conforming to who ? Why Fannie Mae and Freddie Mac ! Why was that so important ? Because all the loans were being sold to someone. Conforming loans used to be limited to low maximums since they were intended to subsidize low income buyers.
Everybody in the business knew what was going on, including Congress and the SEC. They are all responsible. Sure, the Bush Administration failed to stop it soon enough. They tried, though. I have the videos of the testimony before a newly Democratic Congress. The Republicans, like Chris Cox at SEC, were not innocent but the Democrats finally blew the roof off after 2006.
Maybe we should blame the Iraq War because it put the Democrats in control of Congress and took Bush’s eye off the ball. I absolutely agree that the Goldman Sachs people have been far too close to government since Bob Rubin bailed out his friends from Mexican Bonds in the 90s.
