Memory is Fleeting

Just yesterday, a friend of mine sent me this New York Times article dating back to September 1999. Yes, 1999. Interestingly, the article, Fannie Mae Eases Credit to Aid Mortgage Lending, discussed how Fannie Mae decided to ease the credit requirements on loans that it would purchase from lenders after coming under pressure from the Clinton Administration. Ahem.

Humorously enough (if we can even provide some levity to the terrible state we're in), the writer of the article can proudly say, I told you so.
In moving, even tentatively, into this new area of lending, Fannie Mae is taking on significantly more risk, which may not pose any difficulties during flush economic times. But the government-subsidized corporation may run into trouble in an economic downturn, prompting a government rescue similar to that of the savings and loan industry in the 1980's. "From the perspective of many people, including me, this is another thrift industry growing up around us," said Peter Wallison a resident fellow at the American Enterprise Institute. "If they fail, the government will have to step up and bail them out the way it stepped up and bailed out the thrift industry."
How soon we forget.

A lot of people want to point fingers and place the blame, but I'd like to point out that "Wall Street" or "Investment Banks" are not singular entities who control policy or team under a joint modus operandi. The blame can be squarely placed on policy makers here. And, given the date of the aforementioned article, I'll let you choose which policy makers we're talking about. A lot of things have gone wrong over the past years but, generally speaking, poor execution comes from poor leadership & subpar planning.

One thing is for certain (in my humble opinion), bigger government and more policy will not help us get out of this mess in the long run. Frankly, it's what got us in this mess in the first place.
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