More evidence Debunking GOP claims that the poor caused the financial crisis

[LMNO]

http://www.slate.com/id/2281718/

The United States continues to be riven by heated debate about the causes of the 2007-09 financial crisis. Is government to blame for what went wrong, and, if so, in what sense? In December, the Republican minority on the Financial Crisis Inquiry Commission, weighed in with a preemptive dissenting narrative. According to this group, misguided government policies, aimed at increasing homeownership among relatively poor people, pushed too many into taking out subprime mortgages that they could not afford.

This narrative has the potential to gain a great deal of support, particularly in the Republican-controlled House of Representatives and in the run-up to the 2012 presidential election. But, while the FCIC Republicans write eloquently, do they have any evidence to back up their assertions? Are poor Americans responsible for causing the most severe global crisis in more than a generation?

Not according to Daron Acemoglu of MIT who presented his findings at the American Finance Association's annual meeting in early January.

[AFK]

GO CAPITALISM!

[Whatever]

Now everyone will know it's all my fault dammit!!   

[LMNO]

Just adding some drop quotes for the non-clickies.

First, is there evidence that U.S. politicians respond to lower-income voters' preferences or desires?

...a combination of the rising role of campaign contributions, the revolving door between Wall Street and Washington, and, most of all, an ideological shift toward the view that finance is good, more finance is better, and unfettered finance is best. There is a clear corollary: The voices and interests of relatively poor people count for little in American politics.

The impetus for a big subprime market came from within the private sector, not from the poor: "innovation" by giant mortgage lenders like Countrywide, Ameriquest, and many others, backed by the big investment banks. And, to be blunt, it was some of Wall Street's biggest players, not overleveraged homeowners, who received generous government bailouts in the aftermath of the crisis.

Second, is there evidence that the income distribution in the U.S. worsened in the late 1990's, leading politicians to respond by loosening the reins on lending to people who were "falling behind"? Income in the U.S. has, in fact, become much more unequal over the past 40 years, but the timing doesn't fit this story at all.

...the big winners from "financial innovation" of all kinds over the past three decades have not been the poor (or even the middle class), but the rich—people already highly paid.

Finally, Acemoglu examines the role of federal government support for housing.  The FCIC Republicans point the finger firmly at Fannie Mae, Freddie Mac, and other government-sponsored enterprises that supported housing loans by providing guarantees of various kinds.

While Fannie and Freddie jumped into dubious mortgages and did some work with subprime lenders, this was relatively small stuff and late in the cycle (e.g., 2004-2005). The main impetus for the boom came from the entire machinery of "private label" securitization, which was just that: private. In fact, as Acemoglu points out, the powerful private-sector players consistently tried to marginalize Fannie and Freddie and exclude them from rapidly expanding market segments.

The FCIC Republicans are right to place the government at the center of what went wrong. But this was not a case of overregulating and overreaching. On the contrary, 30 years of financial deregulation, made possible by capturing the hearts and minds of regulators, and of politicians on both sides of the aisle, gave a narrow private-sector elite—mostly on Wall Street—almost all the upside of the housing boom.

The downside was shoved onto the rest of society, particularly the relatively uneducated and underpaid, who now have lost their houses, their jobs, their hopes for their children, or all of the above. These people did not cause the crisis. But they are paying for it.

[Whatever]

I think this article actually just explains what I've believed for a long time now.  The government is not about the general population, it's all about the Benjamins.  You have money, they consider you to have an opinion.  No money, no opinion and your vote, eh well, thanks for coming out and voting but we really don't give a flying fuck about you, your situation or what you may or may not think.  It's a given that poor people have no opinions or the rights to one.  Am I right?

[Adios]

I think this article actually just explains what I've believed for a long time now.  The government insiders is not about the general population, it's all about the Benjamins.  You have money, they consider you to have an opinion.  No money, no opinion and your vote, eh well, thanks for coming out and voting but we really don't give a flying fuck about you, your situation or what you may or may not think.  It's a given that poor people have no opinions or the rights to one.  Am I right?

Only one minor change.

[LMNO]

I think this article actually just explains what I've believed for a long time now.  The government is not about the general population, it's all about the Benjamins.  You have money, they consider you to have an opinion.  No money, no opinion and your vote, eh well, thanks for coming out and voting but we really don't give a flying fuck about you, your situation or what you may or may not think.  It's a given that poor people have no opinions or the rights to one.  Am I right?

I question your commitment to Sparkle Motion's trickle-down theory.

[Disco Pickle]

I think this article actually just explains what I've believed for a long time now.  The government insiders is not about the general population, it's all about the Benjamins.  You have money, they consider you to have an opinion.  No money, no opinion and your vote, eh well, thanks for coming out and voting but we really don't give a flying fuck about you, your situation or what you may or may not think.  It's a given that poor people have no opinions or the rights to one.  Am I right?

Only one minor change.

Those words are interchangable IMO.  Especially when you get to the state level.

[Whatever]

I think this article actually just explains what I've believed for a long time now.  The government is not about the general population, it's all about the Benjamins.  You have money, they consider you to have an opinion.  No money, no opinion and your vote, eh well, thanks for coming out and voting but we really don't give a flying fuck about you, your situation or what you may or may not think.  It's a given that poor people have no opinions or the rights to one.  Am I right?

I question your commitment to Sparkle Motion's trickle-down theory.

Yes, I am afraid I had to burn my membership card quite a while back. 

There is no trickle, it all disappears sideways before it has a chance to trickle down anywhere.  More like a lateral drip....

[Jenne]

I think this article actually just explains what I've believed for a long time now.  The government is not about the general population, it's all about the Benjamins.  You have money, they consider you to have an opinion.  No money, no opinion and your vote, eh well, thanks for coming out and voting but we really don't give a flying fuck about you, your situation or what you may or may not think.  It's a given that poor people have no opinions or the rights to one.  Am I right?

Yes.  And when you know this for really real, I mean as in: you've felt the sting of this truth and hear it ringing in your ears and smell it through your nostrils and have swallowed it as it nestles snug in your belly, you're well and truly fucked by it as well.