Mark Winston Griffith
Original Sin:Returning to the scene of the subprime crime
On Wednesday the Wall Street Journal published an article that framed the subprime crisis the way it should be framed: As the product of failed public policy.
In tracing the recent history of the subprime debacle, the Journal cites specific acts that Bush, Greenspan, the four federal regulators, congress (Democrats and Republicans alike) and state governments took to not only allow reckless lending to go unchecked, but to preach the gospel of homeownership and actually cheer on subprime lending like drunks in a bar inciting a sexual assault.
Unfortunately, the "ownership society" was not just an irresponsible peddling of homeownership by the Bush Administration. Many who have championed homeownership and asset-building strategies among the non-profit ranks spoke about homeownership like it was a moral virtue and spent too little time considering the sustainability and economic justice side of homeownership.
As federal policy makers grapple with how to keep the economy from collapsing like a house of cards, critics are still citing the "moral hazards" of coming to the aid of homeowners who should have known better. Those of us who have been warning about this crisis and predicting it for almost ten years, know that this is not about individual homeowners, but about the rules and laws that guide lending behavior. For the last 40 years these rules and laws have determined if healthy, safe lending practices prevail or if abusive and discriminatory practices are the order of the day. Home buyers have as much control over real estate and lending practices as does a consumer with a sweet tooth standing at the end of an assembly line of toxic candy.
It took negligent government oversight of historic proportions to create the subprime and foreclosure crisis. Nothing less than a host of historic public policy initiatives will correct it.