Mayor Bloomberg's False Explanation Of The Mortgage Crisis

November 01, 2011 1:30 pm ET — Alan Pyke

Since the Occupy Wall Street demonstrations caught on, we've written repeatedly about Republican attempts to rewrite the history of the mortgage crisis that scuttled our economy in 2007. Today, New York City Mayor Michael Bloomberg echoed the very worst of those right-wing lies.

Calling the central premise of the Occupy movement "totally unfounded," Bloomberg claimed that "It was not the banks that created the mortgage crisis. It was, plain and simple, Congress who forced everybody to go and to give mortgages to people who were on the cusp" of being unable to afford homes.

BLOOMBERG: I hear your complaints. Some of them are totally unfounded. It was not the banks that created the mortgage crisis. It was plain and simple Congress who forced everybody to go and give mortgages to people who were on the cusp. Now I'm not so sure that was terrible policy, because a lot of those people who got homes still have them, and they wouldn't have had them without that. But they were the ones who pushed Fannie and Freddie to make a bunch of loans that were imprudent, if you will. They were the ones that pushed the banks to loan to everybody.

And now we want to go vilify the banks because it's one target, it's easy to blame them and Congress certainly isn't going to blame themselves. ... Having said all of that, we've just got to focus on how we move and get the mortgage business and construction going rather than how we got here and who did it. It's fun and it's cathartic, I dunno, it's entertaining to go and to blame people and look to the past, but it doesn't do anything for the future. And most of the protesters down there are complaining, I think they should be out there trying to change the world and make it better.

Watch (via CapitalNewYork):

These comments indicate Bloomberg is either ignorant of the facts of the mortgage meltdown or so eager to rid his city of Occupiers that he'll discard the truth. The Community Reinvestment Act of 1977 did not cause the meltdown of 2007, in no small part because that law didn't apply to the private lenders who dominated the subprime market. The fraudulent practices of those lenders and the financial derivatives the private investment houses used to turn the subprime market into an elaborate game of hot potato were left unregulated by the federal government — but that's not even the basis for Bloomberg's criticism of Washington. He claims Fannie Mae and Freddie Mac 'made a bunch of loans' even though they (1) do not make loans, and (2) were backing out of insuring subprime loans as private, unregulated firms rushed into the derivatives casino.

If Bloomberg doesn't know any of this, he hasn't been paying attention to years of reporting on the subject. If he does, he is carrying water for the big banks and fraudsters who are doing everything they can to help Republicans repeal last year's financial reforms and restore the casino culture that let many of them profit from the crisis they created.

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