Via R. Emmett Tyrrell, Representative Michele Bachmann’s take on what caused the financial meltdown:
“There were a lot of bad actors involved, but it started with the Community Reinvestment Act under Jimmy Carter and then the enhanced amendments that Bill Clinton made to force, in effect, banks to make loans to people who lacked creditworthiness. If you want to come down to a bottom line of ‘How did we get in this mess?’ I think it was a reduction in standards.”
This is exactly right. For decades, politicians on both sides of the aisle have been pushing the notion that everyone ought to “own” their home.
Notionally, a good idea: an owner of property is far less likely to trash that property than a renter. Ownership also provides instant roots in the community; a vested interest in seeing that one’s neighborhood and city be well-maintained and safe. Enter liberals, who decried the fact that too many minorities were unable to afford to buy their home.
Solution? Ensure that no one, especially no member of a favored minority, be turned down, regardless of their ability to pay a mortgage. Then, in a move that would ensure that the entire financial system was dragged down by those who were not credit-worthy, financial institutions bundled these precarious mortgages into securities, and traded them.
A rotten base of those who should never have been approved for credit led to the inevitable crash. Good intentions? Perhaps; but it’s never a good idea to raise expectations among those who are doomed to fail. And let’s not let those poor credit risks off the hook: it very much is their individual responsibility to know their own situations.
We need leaders, especially the president, who understands personal responsibility and that government programs, of which too-easy mortgages was but one, can not lead to prosperity. Michele Bachmann is one such.