Krugman and Ritholtz are singing from the same songbook today. Ritholz points out that the subprime debacle was a creation of Wall Street, not caused by Federal Government housing policies, per se. Federal Reserve Board data show that:
- 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.
- Only one of the top 25 subprime lenders in 2006 was directly subject to the housing law that's being lambasted by conservative critics.
Krugman points out the disinformation campaign that is going on in his post on the Wall Street Whitewash.
It's a straightforward story, but a story that the Republican members of the commission don't want told. Literally.
Last week, reports Shahien Nasiripour of The Huffington Post, all four Republicans on the commission voted to exclude the following terms from the report: "deregulation," "shadow banking," "interconnection," and, yes, "Wall Street."
When Democratic members refused to go along with this insistence that the story of Hamlet be told without the prince, the Republicans went ahead and issued their own report, which did, indeed, avoid using any of the banned terms.
And to add a timely note on the incoming legislative power shift, this one says it all.
Last week, Spencer Bachus, the incoming G.O.P. chairman of the House Financial Services Committee, told The Birmingham News that "in Washington, the view is that the banks are to be regulated, and my view is that Washington and the regulators are there to serve the banks."
Maybe it is time to buy bank stocks for the short ride, if you don't mind selling your soul.