Ezra Klein's Wonkblog continues its master class in how America works--and in the process continues its chronicle of the Republican War Against Reality.
Nobody has any business working for, contributing to, or voting for these clowns. Nobody:
Mike Konczal: No, Marco Rubio, government did not cause the housing crisis: said: “This idea – that our problems were caused by a government that was too small – it’s just not true. In fact, a major cause of our recent downturn was a housing crisis created by reckless government policies.”… [T]here’s precious little to back [this] up. The core claim… [is] the existence and affordability goals of Fannie Mae and Freddie Mac (the GSEs) and the Community Reinvestment Act (CRA) were a major reason we had a subprime-driven housing bubble and then a crash. The only problem?… [T]hat’s not true. Let’s go through some things we know.
1. Private markets, rather than the GSEs, created the subprime mortgage boom…. Subprime is a creature of the private label securitization channel (PLS) market, instead of the Government-Sponsored Entities…. “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.”…
2. The Community Reinvestment Act and the GSE’s affordability mission didn’t cause the crisis…. Neil Bhutta and Glenn B. Canner… argue that the CRA couldn’t have been behind the subprime and housing bubbles. ”The very small share of all higher-priced loan originations that can reasonably be attributed to the CRA makes it hard to imagine how this law could have contributed in any meaningful way to the current subprime crisis.” Only six percent of higher-priced loans (their proxy for subprime loans) were extended by CRA-covered lenders to lower-income borrowers or CRA neighborhoods….
3. There’s a lot of research to back this up and little against it…. [The] Government Accountability Office, the Harvard Joint Center for Housing Studies, the Financial Crisis Inquiry Commission majority, the Federal Housing Finance Agency, and virtually all academics, including the University of North Carolina, Glaeser et al at Harvard, and the St. Louis Federal Reserve [also here], have all rejected the Wallison/Pinto argument that federal affordable housing policies were responsible for the proliferation of actual high-risk mortgages….
Conservatives… blur the definition of subprime…. Ed Pinto of AEI… created a new “high risk” category, which he then argues these high-risk loans were held by the GSEs…. Even this new “high risk” category… isn’t anything like subprime… is instead comparable to the national average…. [T]hose who blame the GSEs can’t get the numbers to work [even] when they make up categories. (Fun fact: These same conservatives sang a different tune before the crash. They argued that the CRA and the GSEs were getting in the way of getting risky subprime mortgages to risky subprime borrowers. See Should CRA Stand for ‘Community Redundancy Act? from Cato in 2000 or AEI’s Peter Wallison in 2004 arguing ”study after study has shown that Fannie Mae and Freddie Mac are failing to do even as much as banks and S&Ls in providing financing for affordable housing, including minority and low income housing.”)
The government policy that likely made an impact were deregulatory actions…. Though these are government policies, and they were reckless, I doubt they are what conservatives like Rubio mean.