Suze Orman appeared on Oprah yesterday and blamed the mortgage crisis on that evil Republican President, George W.   That works quite nicely, don't you agree?   Got a problem?   Blame it on Bush!   That works especially well for Oprah who has significantly invested herself in the election of Obama.   Right now, it's pretty clear Obama will win the Democrat nomination and all he has to do is defeat Mr. McCain.   But with all this racist, anti-American stuff floating around him, it is beginning to look as if Obama is completely unelectable.   The only ways around the obstacles Obama has placed in front of the loyal, bleeding heart, liberal Democrat electorate are to paint the economy as a DEPRESSION and to attack the Republicans.   If you can do both at once, so much the better.   The only problem is, the criticisms are not valid.   They possess a hair of truth but they do not stand up to scrutiny.

Suze has what one blogger called "a pretty lucid explanation for the current financial crisis."   She claims that in 2002, President Bush wanted to make it easier for minorities to become homeowners so he could gain politically.   So he eased regulation and "encouraged" the investment community to securitize sub-prime mortage lending.   This caused under-qualified borrowers to get huge loans.   That, in turn, caused the housing bubble we've been hearing about for the past 5+ years.   Then others borrowed themselves up to their eyeballs.   Then, of course, housing prices fell, the economy turned downwards, and mortgage defaults increased.   Suze conveniently lays all this at Bush's feet because he somehow magically forced lenders to make loans, forced homeowners to feel rich and go on spending sprees and then pulled the carpet out from underneath them which caused the whole house of cards (or cards of house) to come crashing down.

If you have a brain, perhaps you see that this is all too convenient.   But in order to try to analyze this rationally, you're going to have to do some digging.   Most people, instead, will buy whatever Suze and Oprah are selling, without bothering to question it and this is what the liberals are banking on.

The first question you should ask and seek answers for is whether George Bush is responsible for pushing private business institutions to make loans to under-qualified minorities.   The answer is, the US has been doing this since the 1970s.   In 1977, under some other president, an act was passed for precisely this purpose.   That act, called the Community Reinvestment Act, required lenders to serve more than just the wealthiest few and to provide lending to "underserved populations."   George Bush was in his twenties at the time and just contemplating his run for political office at the time.

The second question is whether you think Bush pushed subprime lending through some mechanism.   The answer is he did by loosening regulation.   But even that was not totally responsible for subprime lending.   Such risky loans had been a substantial part of the mnortgage market since the 90s when somebody else was president.   Subprime mortgages represented just 5% of all new loans in 1994 and 13% by 1999.   They have jumped to almost 20% in the years since another president left office.

So why did Bush loosen regulation and, thereby, further set the stage for the current crisis?   Well, there was a little event we refer to as 9-11 in which there was substanial risk of the US economy falling into a real depression.   That's what the terrorists were after, if you recall.   Bush did many things to avoid that collapse.   He deserves credit for having staved off what many felt was an inevitable crash.   That would have left not only the US but most other countries at serious risk.   Financial health is an important part of national security.

So, who else is to blame for this crisis.   Certainly the financial institutions get a nice-seized piece of the blame cake.   There's enough blame to go all the way around the political arena - to both sides of the aisle.   And that goes back to elected representatives from the 1970s to today.   But ordinary citizens are equally to blame.   We're the ones who watched our home values go up and up, then mortgaged them to the hilt for hardwood floors, HD TVs in newly constructed media rooms, college educations, big, expensive cars, exotic vacations, and the list goes on and on.   Of course those purchases are what pushed the economy.   But we weren't being particularly patriotic when we refinanced or spent our "earnings."   We were being greedy, just the same way the financiers were being greedy when they started pushing loans with little or no money down, or sold ARMs instead of fixed rate loans.   We were as greedy as the politicians who wanted to purchase votes by making home borrowing easier for minorities.   In sum, there are very few human beings residing insides these United States who have no blame for the crisis.

It is a little too convenient for Oprah and Suze Orman to lay the blame for the crisis at Bush's feet.   But I dare postluate that if you accepted Suzse's words without questioning them, there is little I can do to convince you otherwise.   And that points out an even bigger risk to this country than the mortgage crisis poses.

Labels: 2008 presidential election, economy