Barry Ritholtz: The Big Lie about the Fiancial Meltdown

[rfranklin]

I find this useful since letter after letter from the righties in my local newspaper claims Barney Frank and the CRA forcing banks to loan to minorities are the reasons for the financial meltdown. This serves the purpose of deflecting blame from the Republican base (Wall Street and the 1%) while scapegoating people of color.

Examining the big lie: How the facts of the economic crisis stack up
By Barry Ritholtz, Published: November 19

...The big lie of the financial crisis, of course, is that troubling technique used to try to change the narrative history and shift blame from the bad ideas and terrible policies that created it....

...I want to move beyond what I call “the squishy narrative” — an imprecise, sloppy way to think about the world — toward a more rigorous form of analysis. Unlike other disciplines, economics looks at actual consequences in terms of real dollars. So let’s follow the money and see what the data reveal about the causes of the collapse.

Rather than attend a college-level seminar on the complex philosophy of causation, we’ll keep it simple. To assess how blameworthy any factor is regarding the cause of a subsequent event, consider whether that element was 1) proximate 2) statistically valid 3) necessary and sufficient.

Consider the causes cited by those who’ve taken up the big lie. Take for example New York Mayor Michael Bloomberg’s statement that it was Congress that forced banks to make ill-advised loans to people who could not afford them and defaulted in large numbers. He and others claim that caused the crisis. Others have suggested these were to blame: the home mortgage interest deduction, the Community Reinvestment Act of 1977, the 1994 Housing and Urban Development memo, Fannie Mae and Freddie Mac, Rep. Barney Frank (D-Mass.) and homeownership targets set by both the Clinton and Bush administrations.

-more-

http://www.washingtonpost.com/business/examining-the-big-lie-how-the-facts-of-the-economic-crisis-stack-up/2011/11/16/gIQA7G23cN_story.html

[xchrom]

1. recommend

[Nancy Waterman]

2. Excellent summary!

We need a clear, new narrative to counter the GOP lies:
"The housing crisis and the financial meltdown were caused
by private lenders, who accounted for the vast majority of troubled loans
and operated outside of federal regulations."