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"They want us to go back to the same old policies that got us into this mess in the first place"

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This claim is a big part of Obama re-election advertising (most notably a Bill Clinton ad), but, as Caroline Baum points out, it's fictional: what got us into this mess was a chain reaction from banks overinvesting in bad home loans to borrowers who didn't have the wherewithal to pay for mortgages without the opportunity for refinancing from increased equity. Once the housing bubble burst, everything else followed. The Bush tax cuts and lack of regulation had nothing to do with it (indeed, regulation increased dramatically during the Bush administration).

And Baum doesn't go far enough: as we've documented, the Obama Department of Justice is punishing banks that have returned to sound lending practices by claiming that having tighter lending standards disparately impacts minorities. For some reason, banks haven't been willing to litigate this nonsense. Steve Sailer documents one settlement with a Beverly Hills bank where the DOJ required the bank to funnel $900,000 to third parties to promote minority lending. Conservative journalists looking for Obama administration scandals should analyze these settlements; leaving aside the questionable constitutionality of the DOJ legal theory of liability, it is hard to see where DOJ has the legal authority to settle cases by payments to parties unrelated to the litigation (as opposed to the supposedly injured), and one can almost guarantee that this money is going to Friends of Obama. Wouldn't it be interesting (and corruption of Nixonesque, and perhaps Putinesque, proportions) if it turns out the DOJ is misusing its power to ensure that certain community activists have "walking-around money" on election day?

No, the mess we're in comes from a $1-trillion/year increase in government spending. And at some point George Soros is going to find it profitable to start betting against Treasury bonds, interest rates will spike, and we're going to be Greece, and facing necessary austerity measures that makes Paul Ryan's plan look like Paul Krugman's.

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Isaac Gorodetski
Project Manager,
Center for Legal Policy at the
Manhattan Institute
igorodetski@manhattan-institute.org

Katherine Lazarski
Press Officer,
Manhattan Institute
klazarski@manhattan-institute.org

 

Published by the Manhattan Institute

The Manhattan Insitute's Center for Legal Policy.